I bought a property 20 years ago that was decorated with wood chip wallpaper throughout. My letting agent told me that while still OK, I really needed to remove it, which then meant I had to replaster as the walls were a mess afterwards. Subsequently, I redecorated. I know the redecoration is allowed as a revenue expense, but is the wallpaper removal and plastering also allowed? 

Arthur Weller replies: 

What you have described is most probably a 'like-for-like replacement' and not a significant improvement. See HMRC’s Property Income Manual at PIM2030, which states: ‘Sometimes the improvement may be so small as to count as incidental to a repair. In the absence of other capital indications, the entire cost is then revenue expenditure. Problems can arise where the customer does work on an old asset. A repair or replacement of a part of a building using modern materials may give an apparent element of improvement because of the greater durability, superior qualities and so forth of the new material. But the cost normally remains revenue expenditure where any improvement arises only because the customer uses new materials that are broadly equivalent to the old materials.’ Since the replacement wallpaper can be classed as a non-significant improvement, the removal of the old wallpaper and replastering can also be classed as a revenue expense.