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Michael Paul Accountants

Wear and Tear Allowance

1st April 2016

From 6 April 2016 (1 April for companies) the wear and tear allowance which landlords used to be eligible to claim on furnished residential accommodation, was replaced by a renewals allowance.

Whereas the wear and tear allowance was calculated on the rental income received the renewals allowance is based on the costs incurred and is basically (as the name suggests) the cost of replacing any item of furniture or equipment in the property which aren’t part of the buildings structure.

The key phrase here is ‘replacing’.  If you let a property for the first time and furnish it you aren’t entitled to claim the cost of these furnishings but you will be be able to claim the costs of replacing them.  So if you buy a table and there wasn’t an existing one in the property then the cost cannot be claimed.  However if the table breaks and you have to replace it then you can claim the cost of the replacement table.

The replacement item must be of a similar quality to the original item and not be a significant upgrade.


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