The wear and tear allowance changed in April 2016. Landlords of furnished residential properties could previously deduct 10% of net rent from their profits to cover ‘wear and tear’ on their properties. The deduction could be applied whether they replace any furnishings, fixtures and fittings or repair the property or not.
Landlords are now only able to claim tax relief when they purchase furniture for their rental property.
The new scheme permits landlords to deduct the actual costs of replacing:
One of the benefits of the new rules will be that calculating and determining expenses is easier for landlords. They will not have to work out whether their property is furnished enough or whether something is a fixture in order to claim the 10% relief. Landlords with a portfolio including furnished, unfurnished and part-furnished property will also be able to deduct expenses.
There are a number of allowable expenses that landlords can legitimately claim. It is always worth reviewing your situation with an expert in this field as the rules are frequently changing. If you would like to speak to one of our property taxation specialist, please call us on +44 (0)330 024 3200.