The whole flat roof on a block of flats, for which we have a buy-to-let on one, needs replacing as it has passed its warranty. It will cost approximately £20,000 per flat to do so. If we go ahead, would we be able to offset this against our annual tax bill? If we should then go ahead and sell the flat, would we be able to offset this against our capital gains? 

Arthur Weller replies:  

The expenditure of £20,000 is certainly allowable. It is not clear, however, if replacement of the whole roof is capital expenditure and only capable of being offset against the capital gain when the property is sold or is revenue expenditure and capable of being offset against your annual rental income. It is either one or the other, but not both. If you look at HMRC’s Business Income Manual at BIM35400 (BIM35430 onwards, especially BIM35467), you can see relevant discussion. If you claim it as revenue expenditure, you will have a basis to rely on (i.e., the Samuel Jones case).