Thinking of replacing your furnishings? It may be a good idea to hold off until April, and here’s why. After 6th April this year the 10% wear and tear allowance will be changing, and could be beneficial for landlords who have part or unfurnished properties.
What is the wear and tear allowance?
The wear and tear allowance is 10% of the “relevant rental amount.” As defined on hmrc.gov.uk, this is the receipts from furnished residential lettings recognised in arriving at the profits for the period less, and any expenses that would normally be borne by the tenant.
It covers things such as movable furnishings, carpets, beds and crockery, but does not include any furniture or fittings that will make the property a furnished letting, so baths and toilets.
From the 6th, the 10% wear and tear allowance for fully furnished residential properties will no longer be available – only the actual costs incurred in replacing furniture, furnishings, appliances and kitchenware provided for the tenants’ use will be deductible.
The government predict that from next year, the changes will bring in around £165 million a year.
Why landlords should wait to replace furniture until April
The change is positive for landlords who own part or unfurnished properties, as they will be eligible to claim this new relief. Currently, such landlords do not generally receive any relief for such costs following the new changes.
To find out more about April’s wear and tear changes, speak to one of our expert property advisors today on 020 7078 0214, or visit the HMRC website.