Opening or refitting a shop means a large bill for shelving, counters, lighting, signage and building work. For the accounts, that bill needs splitting, because some of it is equipment the business can take with it and some becomes part of someone else’s building.
Three categories on a shopfitting invoice
| Item | Category | Typical depreciation |
|---|---|---|
| Freestanding shelving, display units, counters, mannequins, till furniture | shop fittings (fixtures and fittings) | 5 to 10 years |
| Partition walls, suspended ceilings, built-in lighting, flooring in a rented unit | leasehold improvements | over the shorter of useful life and the remaining lease |
| Repainting, repairs to existing fittings | revenue expense | none, expensed |
Ask the shopfitter for an itemised invoice. A single lump sum makes the split, and the tax claim, much harder to support.
Capital allowances
Most shop fittings are plant and machinery for capital allowances and qualify for the Annual Investment Allowance, giving full relief in the year of spend for most small businesses. Some building work also qualifies, for example electrical systems and integral features, while alterations to the structure itself do not qualify as plant; part may qualify for the structures and buildings allowance instead. This split is worth agreeing with your accountant before the year end.
Worked example
A retailer refits a rented unit for £48,000 plus VAT: £20,000 for counters and display units, £22,000 for partitions, flooring and lighting, and £6,000 for redecorating existing walls.
| Account | Debit | Credit |
|---|---|---|
| Shop fittings (cost) | £20,000 | |
| Leasehold improvements (cost) | £22,000 | |
| Repairs and maintenance – premises | £6,000 | |
| Input VAT | £9,600 | |
| Trade creditors | £57,600 |
Depreciation and disposal
Depreciate shop fittings straight-line over their expected life. When a store closes, freestanding fittings may be moved to another branch (transfer the cost and accumulated depreciation) or sold; leasehold improvements stay with the landlord and are written off when the lease ends. Dilapidations obligations under the lease are a separate liability.
Register and checks
Keep shop fittings in the fixed asset register by location. At the year end, confirm the fittings still exist (stores are often refitted piecemeal) and write off anything scrapped.
For the general rules see fixed assets in the chart of accounts and repairs and maintenance.