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EPC Upgrades - are the capital or revenue expense

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Just been thinking about upgrades that are required by law to make a property EPC compliant...i.e.. minimum rating of E. Things like replacing glazing, loft insulation, insulating walls etc

Does the cost of doing this count as a revenue expense or a capital expense?

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It could be a mixture of both.

If it is for repairs or renewals then it would be a revenue expense. For example repairing an existing boiler or window that was damaged then that would be revenue. 

If it is installing insulation in walls or the loft where there was none before or it was to an inferior standard then this would be deemed to be an improvement and would be classed as capital.

If we look at boilers so long as it is like for like then it will be revenue. It is unlikely that you will replace a 20 year old model with the same one again so it is acceptable that you would use a modern equivalent. If you were replacing with a completely different spec then this could be deemed to be an improvement.

Similarly you are going to use modern technology when installing new windows and so the fact that there is an improvement to go from single to double glazing wouldn‘t mean you cant claim as revenue.

Take care when dealing with tradesmen on how they write up their work in the invoice to ensure it enables HMRC to see clearly which works are improvements and which are revenue, in case they want to investigate down the line.

The cost of the EPC itself is a revenue expense.






David M Slater ACMA 

Accufy Accounting  - Proactive accounting for property investors 

0208 242 4926    info@accufy.uk



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  • 2 weeks later...

I think it's reasonable to classify these expenses as revenue expenses. You're talking about maintaining your property rather than capital improvements.

If you build an extension or a conservatory, then that would be a capital expense. 


Vin Gupta
Property Investor and Developer
UK Property Blog: https://evolutionblogger.com/article/uk-property-articles
Travel Blog: https://soulfultravelguy.com/

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