Maintenance charges

11 December 2012

Issue: 4383 / Categories: Forum & Feedback , Business , Income Tax

A limited company owns the freehold of a block of flats. The roof needs to be replaced and it is proposed that the leaseholders pay £625 per quarter to cover this, in addition to the normal maintenance charges. Will relief be available immediately or only after the repair expenditure is incurred by the company?

A buy-to-let investor owns a flat in a small block consisting of six flats half of which are held by other buy-to-let investors and half are owner-occupied. The roof needs to be replaced at an estimated cost of £60 000.

To meet this expense it was agreed that a reserve fund would be created by charging the owner of each flat £625 per quarter at the same time as the usual maintenance charge which is £500 per quarter.

The managing agents’ quarterly invoice itemises the two items separately describing them as maintenance and as roof work.

The freehold is owned by a single purpose company of which each flat (leaseholder) owner owns a share. The reserve fund accrues interest at a low interest rate. Can readers advise on:

whether the quarterly roof work charge can be treated as an expense and deducted...

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