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Converting flats/rooms above a shop or office

29th December 2010

An increasing trend is the conversion of office space/storage space (above an office or shop) into flats. Bear in mind that you may have available one of the most generous allowances around- 100% capital allowances (tax deduction against income tax) on the expenditure subject to a few conditions:

Qualifying flat
Must be “dwelling” i.e. residential let
4 rooms or less (excluding bathrooms/kitchens)
Lease term under 5 years
Not be “high value” e.g.4 rooms for £480 pw in Greater London

Qualifying expenditure – on conversion/renovation costs – but not extensions and land purchases

Qualifying building – ground floor business, build pre 1980, under 4 storeys

Before consulting your accountants please visit the following link.

http://www.hmrc.gov.uk/manuals/camanual/CA43000.htm