BIM46960 - Specific deductions: repairs & renewals: change to valuation basis

From capital allowances to valuation basis

Where a request is made for a change from capital allowances to valuation basis and the assets are such that valuation basis is appropriate (see BIM46940), the capital allowances written down value can be accepted as the opening figure for the valuation basis.

From renewals basis to valuation basis

Valuation basis cannot apply to expenditure on assets which has been relieved by renewals allowance. However, you can accept claim for future assets to be dealt with under valuation basis, provided that basis is appropriate to the class of asset (see BIM46940).

Example

For example, suppose £1,000 is spent on replacing an asset. There is no improvement and no sale proceeds from the old asset. A renewals deduction is given for the £1,000. In this case, that £1,000 cannot come into a valuation basis computation. But the replacement for that asset could provided no renewals deduction was claimed for it.