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A leading firm of accountants is advising landlords to wait until April 6th before replacing furniture in rental properties. April 6th is when the new 10% wear and tear allowance is phased out and costs associating with replacing furniture become tax deductible.
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Check with HMRC for Guidance
After this date, landlords can only claim for the actual costs incurred in replacing items, not the cost of providing them in the first place. So you can claim for the cost of replacing a broken washing machine with a new one of a similar quality, but you can’t claim back the cost of providing one if there isn’t one there already.
If in doubt about whether it’s a replacement or improvement, check the guidance provided by HMRC, but generally speaking, improvements as a result of newer technology can be ignored.
According to Robert Pullen from Blick Rothenberg LLP: “This is a significant step away from the wear and tear allowance, bringing the position more in line with the general deductibility of repair costs or replacing toilets, boilers, etc. Landlords of fully furnished properties will feel this change adds additional complexity to an increasingly complicated area of deductible costs, following closely on the heels of the restriction to finance cost expenditure.”
Good News for Some Landlords
The changes are good news for landlords who let out unfurnished or part furnished properties, as they can’t currently claim any tax relief.
Landlords with holiday lets are not affected by the new rules.
