Leasehold improvements are permanent alterations to leased premises: partitions, wiring, plumbing, flooring, racking, a counter.
They generally stay behind
Anything fixed to the building usually becomes the landlord's at the end of the lease, whoever paid for it.
That makes the length of the lease directly relevant to whether the spend is sensible. A substantial fit-out on a short lease is money spent on someone else's asset.
Tenant improvement allowance
A contribution from the landlord toward the work, common where the space needs adapting and the lease is long enough to justify it.
It is negotiable and frequently not asked for. Where it is offered, the detail matters: what it covers, whether it is paid up front or as a rent reduction, and what happens if the tenant leaves early.
How they are treated in the accounts
As capital expenditure rather than a running cost, so the spend reaches profit gradually.
They are written down over the shorter of their useful life and the remaining lease term, on the reasoning that the business loses them when the lease ends — see useful life and salvage value.
Ordinary repairs and decoration are not improvements and are expensed normally.
Reinstatement
Many leases require the premises to be returned to their original condition, which means paying to install the work and paying again to remove it.
Where that obligation exists it is a future cost that should be known at signing rather than discovered at exit — see commercial leases.
Before committing
Whether the improvement is genuinely needed, whether the lease is long enough to earn it back, and whether the landlord will contribute. All three are decided before signing, and none can be revisited afterwards.