Replacing single-glazed windows with double glazing will now be accepted as "allowable expenditure on repairs". That means the cost can be offset against tax on current or future profits, leading to potential savings of up to 拢24m.
Transfer landlords will particularly benefit but the news is good for any association carrying out major refurbishment projects.
The savings may not be apparent immediately as many registered social landlords do not pay tax because they only make small profits, or even losses in some cases. But it could turn into a real-terms saving if the RSL makes a profit in the future.
Consultant KPMG has long been lobbying for a change in the Inland Revenue's treatment of window replacements. KPMG tax manager Kathryn Austin said the scale of expenditure on windows was "significant" and that some housing associations had been considering taking the matter to court.
The National Housing Federation has called for this tax concession in two pre-Budget submissions to the Treasury.
NHF policy officer Bob Wilson said: "Based on figures from our members, the impact in the year 2001/02 would have put housing associations at a disadvantage to the tune of 拢8m. And the six-year cumulative impact would have been 拢28m.
"This is welcome news and a sign that the Revenue is prepared to listen to reason."
He added that the federation would be eager to see whether the interpretation would be extended to other types refurbishment such as bathroom replacement.
Barry Thompson, Severn Vale Housing Association's resources director, said: "This is good news because in the past we have had to argue that double glazing is an industry standard and therefore not an improvement.
"But the Inland Revenue argued double glazing was better quality and therefore it was an improvement."
Leslie Bance, an accountant at MHS Homes, said the decision would benefit the association immediately.
"We have 7000 homes and we spend a lot of money replacing windows every year," Bance explained.
Source
Housing Today
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