10% Wear and Tear Allowance and Replacement of Domestic Items Relief
*****Wear and tear allowance is no longer available for the tax year 2016-2017 or for future years. Then information on this page is therefore for information purposes only on previous tax years. See Replacement of Domestic Items relief below for what has replaced the Wear and Tear Allowance*****
Wear and Tear Allowance
If you let a residential property in the UK as furnished accommodation, capital allowances are not available on furniture. Instead you can claim either:
*****Wear and tear allowance is no longer available for the tax year 2016-2017 or for future years. Then information on this page is therefore for information purposes only on previous tax years. See Replacement of Domestic Items relief below for what has replaced the Wear and Tear Allowance*****
Wear and Tear Allowance
If you let a residential property in the UK as furnished accommodation, capital allowances are not available on furniture. Instead you can claim either:
- the cost of replacing a particular item, but not the cost of the original purchase (the renewals basis) or
- 10% of the gross rents received after deducting charges or services that would normally be borne by the tenant but are in fact borne by you for example council tax, sewerage and water rates (the wear and tear allowance).
It generally makes more sense to claim the wear and tear allowance than opt for the renewals basis as the relief is obtained at the outset rather than when the item is replaced. It also continues year after year whether you replace anything or not. Also the tax saved in the long term will by far exceed the original cost of furnishing.
There is no definition of the word ‘furnished’ in the tax legislation but it is taken to mean a property capable of normal occupation without the tenant having to provide his own beds, chairs, tables cooker etc. The things covered include:
- Moveable furniture or furnishings such as beds or suites;
- Fridges and freezers;
- TVs;
- Carpets and floor coverings;
- Curtains;
- Linen;
- Crockery & cutlery;
- Cookers, washing machines & dishwashers.
In addition to the 10% wear and tear allowance you can claim the net cost of renewing fixtures that are an integral part of the building – those that are not normally removed by either tenant or owner if the property is vacated or sold. For example baths, washbasins, toilets, central heating. Expenditure on renewing such items is normally a revenue repair to the building, but the original cost of installing these items is not. The net cost means the cost of replacement less any amount received for the old item.
Replacement of Domestic Items Relief
This relief is available for Landlords who rent out residential property whether it is unfurnished, part-furnished or fully furnished and can be claimed from 6th April 2016. Landlords can claim for the replacement value of replacing domestic items such as:
- movable furniture for example beds, free-standing wardrobes
- furnishings for example curtains, linens, carpets, floor coverings
- household appliances for example televisions, fridges, freezers
- kitchenware for example crockery, cutlery
In order to claim this relief the item must be a replacement item for something that was already in the property and be for the sole use of the tenants. The old item must no longer be available for use in the property. The initial cost of providing these items in not deductible and no relief is available for this, only for the replacement item. Further, the replacement item must be the same or substantially the same as the old item. For example if you replaced a sofa with a sofa bed you could only claim the replacement cost of the sofa not the full cost of the sofa bed. If replacing carpet you could not deduct an amount for replacing a synthetic carpet for a pure wool carpet for example.
The Replacement of Domestic Items relief is not available for properties that qualify as a Furnished Holiday Let or the Rent a Room Scheme.