If a business rents a commercial property and under the terms of the lease is required to incur the cost of repairing part of the property, the expense is allowed against the profits of the tenant’s business in full as the cost is required to enable the business to continue.
‘Repair’ in this context means ‘restoration’ of an asset by replacing subsidiary parts of the whole property.
If there is a significant improvement of the asset beyond its original condition then that is deemed capital expenditure and depending upon the type of improvement may fall within the capital allowances rules.
Example:
Cerne Books Ltd rents a commercial property and under the terms of the lease is required to undergo specific repairs. Following a storm some tiles came off the roof – the cost of replacing these tiles is deemed a ‘repair’ and can be deducted from the company’s profits as an allowable expense.
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