'Will fixing my flat's dangerous cladding cut our tax bill?'

I co-own a rental flat with my son. Since the Grenfell Tower fire, it’s been recommended that the block replaces the cladding and the balconies, as these had wooden floors. John from Surrey

'Is this a running cost or improvement?'

Samm Galloway, Which? money expert, says…

HMRC doesn’t have a set list of allowable costs for capital gains tax purposes. However, it does have guidance around allowable expenditure.

Where the work carried out restores your property to what it originally was, replaces something with a standard fitting, or – as in your situation – replaces something because the existing setup is non-compliant, or to bring it up to the standards required by law, this would be categorised as revenue expenditure. 

Using modern materials in the replacement may seem like an improvement. However, if these are performing the same function as what was originally there, HMRC would again deem this to be a revenue expense.

To qualify as a capital expense for the purposes of capital gains tax, either wholly or partially, the work carried out would need to involve improving or changing the function of part of the property – for example, by adding an extension.

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source https://www.which.co.uk/news/article/will-fixing-my-flats-dangerous-cladding-cut-our-tax-bill-azbGh3L4aWTb