NEWSLETTERS

Replacement of furnishings and equipment

Published 27th March 2017

The 10% Wear and Tear Allowance was introduced in 1975-76 as an alternative to the replacement basis for calculating a deduction for replacing items of furnishings or equipment in a fully furnished residential letting property. In 2013 the replacement basis was withdrawn. Now the Wear and Tear Allowance has been withdrawn with effect from 5th April 2016.

From 5th April 2016 (1st April 2016 for company landlords paying corporation tax) there is a new relief. This relief provides a deduction for the cost of replacing items of furniture or equipment when computing the taxable profit, subject to several conditions:

  • The person claiming the deduction must have a property business that includes a dwelling house
  • The item being replaced must be available for the exclusive use of the tenant
  • The replacement is on a “like for like” basis with no element of improvement.

The “like for like” restriction means that where a replacement item includes an element of improvement then only part of the cost is allowable. The part that is allowable is what the cost would have been on a like for like basis (i.e. with no improvement element).

As with the previous allowance, there is no allowance for the initial furnishing and equipment in a property.
These rules do not apply to a furnished holiday letting where capital allowances are available.

The newsletters on this website are believed correct at the time of publication. They may not include subsequent changes in the law. If the subject matter is of interest you should contact us to see if there is a relevant update.

Taxation is a complicated subject and is subject to change. This article is provided for general guidance only. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article.

Landlords Tax Services Ltd, specialises in the taxation of residential property income and gains and around half its clients are resident outside the UK. If you would like specialist help contact Maurice Patry F.C.A. at maurice@landlordstax.co.uk or for more information visit our website at Landlords Tax Services Ltd