UK Buy to let properties -Wear and tear allowance
101 Buy To Let Property And Tax Tips
It was announced in the July Budget that Landlords who own furnished properties will no longer to able to claim the 10% ‘wear and tear allowance’ with effect from April 2016.
The relief allowed those who own furnished properties, to claim a depreciation allowance for furniture etc in the form of a wear and tear allowance which was calculated as 10% of the gross rents each year, ( less any costs normally borne by the tenant which were charged in addition to the rents were deducted).The allowance has been available to landlords for years and avoided the need to keep records of actual expenditure on items replaced. It was also a simple straight for-ward method of allowing a deduction for items of furniture and fixtures in the furnished residential property based on the rent charged and not what was spent. It covered such items as:
– Beds, sofas, chairs, tables
– TV’s, fridges, freezers, cookers
– Curtains, carpets, furnishings
– Crockery, cutlery, linen
– Washing machines
ALTERNATIVE- RENEWALS BASIS
Instead of claiming the wear and tear allowance, the alternative method was to claim a deduction against your rent income on the actual cost of replacing the item. The initial cost of providing the furniture has never been allow-able and so it is the renewal cost
that can be claimed.
Care needs to be made as the renewal is generally on alike for like basis although common sense is used to determine whether this is reasonable. E.G A washer is replaced with a washer/dryer so that it now performs more than the original function.
Additional depreciation may however still be claimed for other types of fixtures such as baths, washbasins, and toilets which would be treated as expenditure on repairs and which was never covered by the ‘Wear & Tear allowance’.