decorating a property just prior to renting out

[baffled of suffolk]

Hi there. I've owned a flat for over 8 years & family members lived there until last November (2012). When they moved I decided to rent out the property but it needed decorating before being able to do this. I believe that decorating expenses can be claimed. As I decorated the property myself, how much can I claim, if anything? There obviously won't be any receipts for my labour. Thanks, BOS

[wamstax]

Hi There if you look at HMRC manuals you should be able to include the expense in the first year of letting on the following basis:-

see http://www.hmrc.gov.uk/manuals/pimmanual/PIM2505.htm
A taxpayer may incur expenses for the purposes of a rental business before that business starts. If so, they may be able to claim a deduction for them once the letting begins, (ICTA88/S401 or ITTOIA05/S57). Relief is only due under these special rules where the expenditure:
•is incurred within a period of seven years before the date the rental business is started, and
•is not otherwise allowable as a deduction for tax purposes, and
•would have been allowed as a deduction if it had been incurred after the rental business started.

This means that, to be allowable, the expenditure must be incurred wholly and exclusively for the purposes of the rental business and must not be capital expenditure etc (see PIM2000 onwards)

[baffled of suffolk]

Thanks for taking the time & trouble wamstax. Sounds like I can claim then, just don't know how much. Hours spent x notional hourly rate, £x per room or just a finger in the air figure? Any suggestions? Thanks in anticipation. BOS

[King_Maker]

You can claim for the materials but not your own time.

[wamstax]

Ok sorry as King_maker rightly says own time is a no no and I should have pointed this out .

Think about it - in layman's terms (and without the intricacies of mutual trading or costs out of one's self) if you were charging for your services then you would have another labour source of income that would have to be shown as earned by you in your tax return and whatever you deducted from the letting would be taxed as earned income. Answer would be a lemon and really a non-starter as it might lead HMRC to think about the allowability of more straightforward deductions

[baffled of suffolk]

Thanks King_Maker & Bill. Yes, that makes perfect sense. I'm rubbish at decorating anyway & certainly wouldn't get paid for it.
Really appreciate the advice.
Cheers, BOS.