I am selling a second property, which has been rented out. I am aware that I will be subject to capital gains tax. It was a new build when I bought it 15 years ago so it didn't need any improvements except that last year, we changed the boiler to a condensing type which is around 30% more efficient. Could this be claimed as an improvement? Can I use this to offset the gain?  

Arthur Weller replies:  

If you look at HMRC’s Property Income Manual at PIM2030 in the section headed ‘When there is capital improvement’ it states: ‘It is largely a question of fact and degree in each case whether expenditure on a property leads to an improvement. Sometimes the improvement may be so small as to count as incidental to a repair. In the absence of other capital indications, the entire cost is then revenue expenditure. Problems can arise where the customer does work on an old asset. A repair or replacement of a part of a building using modern materials may give an apparent element of improvement because of the greater durability, superior qualities and so forth of the new material. But the cost normally remains revenue expenditure where any improvement arises only because the customer uses new materials that are broadly equivalent to the old materials. For example, the following are usually revenue expenses in the absence of any other capital indications. The cost of replacing: wooden beams with steel girders, and lead pipes with copper or plastic pipes. There is likely to be capital expenditure if, say, the steel girders were designed to take heavier loads so that the building could take larger machines after the work was done. The same is true if the new pipes are designed to take greater pressure or heat. But there is usually no improvement if trivial increases in performance or capacity arise solely from the replacement of old materials with newer but broadly equivalent materials. For example, the replacement of pipes or storage tanks of imperial measure with the closest metric equivalent may result in slightly increased diameter or capacity but the cost is still revenue expenditure. Alterations due to advancements in technology are generally treated as an allowable repair rather than an improvement, if the functionality and character of the asset is broadly the same. For example, when single glazing is replaced with double glazing.’