Income Tax (Trading and Other Income) Act 2005 section 55A

Expenditure on integral features

Section 55A deals with whether businesses can claim a deduction for expenditure on integral features of buildings or structures, and how the treatment differs depending on whether the cash basis of accounting is used.

• Under capital allowances legislation, expenditure on providing or replacing integral features of a building or structure cannot normally be deducted when calculating trading profits.
• Integral features include items such as electrical and lighting systems, cold and hot water systems, heating, ventilation and air conditioning systems, lifts and escalators, and external solar shading.
• Instead of a revenue deduction, such expenditure is intended to be relieved through the capital allowances system as plant and machinery.
• However, this restriction does not apply to businesses that calculate their trading profits using the cash basis — they may deduct expenditure on integral features as a normal trading expense.