HMRC’s Property Expenses Error: What You Need to Know

Accountant Medway

When it comes to tax, making sure you are filing your submissions accurately is vitally important. Indeed, as a leading local accountant Medway, this is something we understand better than most; as such, we go out of our way to ensure our clients get the best possible accounting support. However, from time to time, odd cases that don’t seem to quite add up arise. Such was the case for landlords in late 2023 when they were told some of their property expenses weren’t allowed. Namely, this seemed to relate to boiler replacements for the 2021/2022 tax year.

But what really happened here? Well, if you have been caught out by this, we’d recommend contacting your local “accountant near me” for tailored support. Nonetheless, we’ve also taken a quick look in today’s guide to help.

accountant medway
Get a FREE consultation – CLICK

HMRC’s Property Expenses Error: What Went Wrong?

Everyone makes mistakes; however, when it’s a big name like the HMRC, these tend to be much harder to overcome. And, when that mistake leads to people being accused of inaccurate accounting, it can potentially be costly.

As such, it was perhaps no wonder that so many landlords found themselves in a worrying position in late 2023. Indeed, a letter from HMRC was sent to landlords claiming that they had claimed ineligible tax relief on boiler replacements. However, this was later found to be incorrect, meaning that many landlords had been incorrectly told that their tax returns had been completed inaccurately.

The Original Basis for the Claim

At the outset, HMRC’s claim that landlords had been incorrectly claiming expenses for boiler replacements was due to property improvements. Indeed, since HMRC claimed a boiler replacement to be an improvement, it assumed that this was not tax deductible. However, this was something of a grey area.

Indeed, in 2012, changes regarding repairs and replacements in rental properties came into play. This led to main landlords replacing their letting properties’ boilers under this category. Unfortunately, HMRC initially didn’t see it as falling into this group, hence sending out a nudge letter to many landlords.

Self assessment Medway
Get a FREE consultation – CLICK

Concerns Raised by Landlords and Accountants

Given the nature of boiler replacements, many landlords and their accounting teams were surprised by HMRC’s stance. As such, many queries were raised in the aftermath of this notice being sent out; in turn, this led to the view being redacted, and the HMRC sent out corrective letters to those affected.

What If I Already Amended my Self Assessment?

Generally speaking, when you receive a nudge letter, it’s hugely important to act on this quickly. However, if you did so and amended your self assessment statement. After receiving the notice, don’t panic; the corrective letter should include details of who to contact for further support.

Fortunately, going forwards, HMRC have amended their processes to count boiler replacements as tax-deductible repair and maintenance expenses. This should help simplify things for landlords, going forwards. Nonetheless, your local accountant near me should also be able to provide further guidance, so be sure to reach out to our Medway team if you need any extra support.