Although this may not be the latest news as the tax rules changed on 6 April 2013, but it’s one of the most common questions we get asked, “What can I claim tax relief on since the rules changed?”
Let us explain…
Prior to 6 April 2013, HMRC allowed landlords of unfurnished and partly furnished properties to claim 100% tax relief on the cost of replacing furniture in those properties under the “renewal basis”.
As a result of the rule change, landlords are now unable to claim a deduction for the costs of replacing furniture. This affects standalone items such as fridges, cookers, carpets and curtains.
However, there are some exceptions to the rules, if you are replacing items that are integrated such as a hob or fridge freezer. Or items such as boilers and air conditioning units where less than 50% of the system is being replaced. HMRC will consider this as a repair to the property allowing the costs to be tax deductible.
You can still claim tax relief on repairing or maintaining furniture and fittings.
For fully furnished properties
If your property is fully furnished, there are no changes and you still remain eligible to claim a wear and tear allowance each year to cover the cost of replacing furniture and furnishings such as carpets and curtains. The wear and tear allowance is 10% of the net annual rent.
Note that you can only claim for capital allowances for furniture used inside a property which is let out commercially as furnished holiday accommodation for at least 140 days a year (other conditions do apply).
Worthwhile considerations
Check the prices before purchasing any large items, it may be cheaper to buy integrated as opposed to free standing goods.
Is it easy for you to transition from unfurnished or partially furnished to letting your property as fully furnished to take full advantage of the wear and tear allowance?
You could let your property out unfurnished, allowing the tenants to provide white goods and curtains, mitigating some of the expense, if this is feasible.
If this has been of interest and you would like to know more relating to your own personal circumstances, please call us on 01253 899989, we would be happy to help you.
