Withdrawal of wear and tear
If you let out fully-furnished residential property you can claim a wear-and-tear allowance against the profits. This is calculated at 10% of the rents received for each property, and applies irrespective of what you spend on furnishings each year.
That allowance is abolished from 6 April 2016 (1 April 2016 for corporate landlords). For 2016/17 and later years, you will be able to claim the cost of replacing 'domestic items' used in your let residential property. Domestic items are: furniture, furnishings, household appliances and kitchenware, but not fixtures – which are items fixed to the property, such as a built-in hob. Replacing fixtures continues to be treated as an allowable repair for tax purposes and is unaffected by the new rules.
You won't be permitted to claim for the cost of items initially provided in the property, only for the replacement of those items, on a like-for-like basis. However, any fees incurred when disposing of the old items can be claimed. The new rules will apply to both partlyand fully-furnished properties.
There are special rules for properties that qualify as furnished holiday lettings. These allow capital allowances to be claimed for all items (both fixed and loose) used in those properties. The capital allowances are available on the cost of the initial items used in the property as well as on any cost of replacements.
Where you let a room in your own home and claim rent-a-room relief, you can't claim for the cost of replacing domestic items. Ask us if you have any questions about what you can claim as a deduction when letting property.