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My client has a residential care home which is used to provide care facility for people of old age and disability. They are converting a bathroom into a wet room, and wondering if they can claim capital allowances on this?

The residential care home is being operated by the client, clearly indicating the presence of qualifying trade. It is important for the client to avoid mixing up the typical care home with the restriction for dwellings in s.35 CAA 2001, given that HMRC provides a distinct definition of a dwelling in CA11520.

Determining whether the expense relating to the conversion of the bathroom to a wet room, are revenue or capital in nature holds significance in this scenario. Typically, repairs and replacements fall under revenue, while alterations and improvements are categorised as capital.  See HMRCs guidance at BIM35430.

Capital expenditure contained within list C, s.23 CAA 2001 is qualifying plant and machinery which are not restricted by s.21 and s.22 (buildings and structures). Examples which relate to the client’s scenario would be included in item 5 of List C such as sinks, shower, washbasins which being installed into the wet room, can attract capital allowances as plant.

Additionally, s.33A CAA 2001 outlines the provision of integral features, examples being a new water system and a new electrical system which are equally treated as plant.

On the other hand, in the wet room the flooring, doors and ceilings will not qualify for capital allowances as this expenditure is excluded by s21 List A, being treated as part of the building, not plant.

Capital expenditure on the building which does not qualify as plant and machinery, is likely to qualify for Structures and Buildings Allowances under s270BJ CAA 2001. See CA93450.

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