New kitchen in FHL

[njt]

We were not able to sell our PPR and so we moved out in May 2011 and started renting it out for holiday lettings. It qualifies for FHL (it has been let out for 100 days) and satisfies the other criteria. We propose to continue this for the foreseeable future, possibly serveral years. We make no private use of the property and do not intend to return to live there but to use it to generate income. We will in due course sell it (I am conscous of PPR issues).

We had feedback that the kitchen is not satisfactory (it is a rather shabby kitchen). While this was fine when we lived there, in response to this, to improve bookings and marketability, we propose to fit a brand new kitchen in a different, better located, room next month (Feb 12). This will also involve some minor structural work to make an opening in an existing wall to join the kitchen to the main reception area. Total cost is likely to be £12,000 for the kichen and £4000 for fitting and labour. We propose to retain, but essentially, 'mothball' the existing kitchen since it is not worth converting it to anything else (and some guests may want extra kitchen space possibly).

I am not sure of the tax treatment of the costs of this work? Are capital allowances available? Is there anything we need to know, or do, (or not do) before the works are done?

A further related subsidiary question is that I gather a 'period of grace' election can be made so that the property will meet the FHL requirements (subject to conditions) for the next 2 years. But, how and when is this done? Is it just a letter? (I think it has to be done in this tax year although I have received conflicting opinions).