My client spent £5,000 on ‘dressing’ an ex-let property for sale. Is this deductible in the capital gains tax computation? Although it could be argued as an incidental cost of sale, HMRC’s manual states: ‘incidental costs limited to....’ which does 

Arthur Weller replies:
You are referring to the Capital Gains manual at www.gov.uk/hmrc-internal-manuals/capitalgains-manual/cg15250, which indicates that incidental capital costs of sale are limited to certain categories. However, enhancement expenditure which improves the property, and is ‘reflected in the state of the asset at the date of disposal’ is also allowable (see page CG15180). But there is an important factor to consider here. Capital expenditure is only allowable in a capital gains computation if it is truly capital. Any expenditure that could have been offset against revenue profits is not allowable capital expenditure (see CG14300).