If you bought a second hand car, machinery or property cheap because of its poor run-down condition, you might think when repairing it, you can claim this as a cost against the business/property income; this is often no the case.

TRAP: If you have to repair an asset before it is used, this counts as a capital cost; because if you bought it in working order, you would have paid a higher price. The same applies to property, if is run down, electrics or heating not working, only half a kitchen or no kitchen, then putting this right are capital cost, because if you bought it fully renovated, you would have paid a higher price.

TIP: Some items are regarded as non-capital regardless by their nature or specific legislation. E.g. servicing or minor wear & tear repairs and for property all decorating costs, painting, wall paper, other cosmetic items.

Questions to ask yourself:

1. Can the item actually be used before it is refurbished or overhauled?
2. Can the property be actually lived in before you refurb it (not whether you would live in it or not is irrelevant; your standards are probably higher than legal ones)?
1. If everything is functional, fitting kitchen, bathroom, heating, hot water, electrics and pass Gas and & Electric safety checks you are probably good to refurb it and claim the cost against your rental income.