No capital allowances for plant and machinery installed in Houses of Multiple Occupation

HMRC have recently confirmed their view that common areas in Houses of Multiple Occupation (HMO) are parts of a “dwelling house” and ineligible for capital allowance claims.

The capital allowance legislation specifically denies tax relief for plant and machinery installed in a dwelling house. However, plant and machinery installed in the common areas such as hallways, stairs and lift shafts, in blocks of flats would qualify as the flats themselves are the dwellings, not the building as a whole.

This would seem inconsistent with the HMRC view on HMOs and there may be a test case on the interpretation, particularly as there is no definition of “dwelling house” in the tax legislation. There is also a lack of clarity concerning the status of University Halls of residence where there is often substantial expenditure on plant and machinery in common areas.

See: CA11520 - Capital Allowances Manual - HMRC internal manual - GOV.UK (https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca11520) and CA23060 - Capital Allowances Manual - HMRC internal manual - GOV.UK (https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23060)