HMRC Publish Details Of Wear And Tear Tax Changes

Tuesday, July 28, 2015
HMRC Introduce Replacement Furniture Relief To Supersede Wear And Tear Allowance

HMRC Introduce Replacement Furniture Relief To Supersede Wear And Tear Allowance

HMRC Introduce Replacement Furniture Relief
To Supersede Wear And Tear Allowance

HM Revenue and Customs, (HMRC), have finally announced the scope of the proposed amendments to the wear and tear tax allowance for landlords of rental properties, outlined in the post election budget by Chancellor George Osborne.

At the 2015 Summer Budget the Government confirmed its intention to consult on a measure intended to improve how residential property rental businesses are taxed. The measure is designed to improve the consistency and fairness in the taxation of residential property businesses.UK Chancellor - George OsborneMr Osborne proclaimed that the traditional wear and tear allowance for landlords of furnished rental properties, which used to allow 10% of rental profits to be discounted for occupational wear and tear, was to be scrapped in April 2016.

It is intended to be replaced with a new kind of replacement furniture relief allowance that only allows landlords to deduct incurred costs when they are forced to replace furnishings and fixtures in properties used for rental purposes.

The scope of the tax changes have now been published in a detailed 11-page HMRC consultation document and HMRC want the professional opinions of landlords and letting agents on the proposals.

The wear and tear tax allowance previously only applied to fully-furnished rental properties, however, following the proposed change, landlords and letting agents will no longer need to evaluate if the rental property is furnished sufficiently to claim the new replacement furniture relief allowance because the new relief will apply to all landlords of rental properties, no matter what level of furnishing is provided.

The critical details of the HMRC consultation document are as follows:

  • The initial cost of furnishing a rental property is not allowed.
  • The new replacement furniture relief applies to the replacement of furnishings.
  • The replacement furniture relief will apply to landlords of unfurnished, part furnished and furnished properties.
  • The replacement furniture relief will not apply to ‘furnished holiday letting’ businesses or the letting of commercial properties, because these businesses receive relief through the capital allowances regime.
  • Landlords will be able to claim a deduction for the capital cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant’s use in the dwelling house, such as:
    • Moveable furniture or furnishings, such as beds or suites
    • Televisions
    • Fridges and freezers
    • Carpets and floor-coverings
    • Curtains
    • Linen
    • Crockery or cutlery
    • Beds and other furniture

HMRC believe that by limiting the scope of the replacement furniture relief allowance to items that are strictly provided for tenant’s use in rented property removes any opportunity for landlords to claim the cost of larger items used for the purpose of operating their property rental business, such as a car.

Fixtures integral to properties that would not normally be removed by the owner if the property was sold are not included because the replacement cost of these items would, as now, be a deductible expense as a repair to the property itself.

Fixtures include items such as:

  • Baths
  • Washbasins
  • Toilets
  • Boilers
  • Fitted Kitchen Units

Landlords won’t have to decide if replacement items that may be required are fixtures or fittings, as under the proposals, the costs will be allowed to be deducted from their rental income to determine the profits of their property rental business.

In order to reach the people directly affected by the issues under discussion in this consultation, HMRC will seek to engage with organisations that represent landlords and letting agents, including:

  • National Landlords Association (NLA)
  • Scottish Landlords Association (SLA)
  • Landlords Association of Northern Ireland (LANI)
  • Residential Landlords Association (RLA)
  • Association of Residential Letting Agents (ARLA).

HMRC have also declared that they would like to hear from businesses, individuals, tax advisers, professional bodies and any other interested parties involved in the letting of residential property, including landlords and letting agents, and have initiated a 12 week consultation period from 17 July 2015 to 9 October 2015 in order to gain professional feedback on the introduction of the replacement furniture relief allowance.

To respond to this consultation, request a hard copy, or ask for information about consultation events, etc. please contact Megan Shaw at HMRC by emailing


or contact her by post at:

Megan Shaw,
HM Revenue and Customs,
CTIS, 3/64,
100 Parliament Street,

This was written by Mike Clarke. Posted on at 11:30 am. Filed under Landlord News. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.