Demise of wear and tear allowance

You might be aware that wear and tear allowance is available as a tax deductible expense for landlords of residential properties and this allows landlords to claim an expense equal to 10% of the rents of fully furnished residential properties, however in April 2016 this allowance is to be removed. (The change will take place on 6th April 2016 for individuals who are landlords and 1st April 2016 for corporate landlords.)

Instead you will be able to claim the cost of replacing any items of furniture or equipment in a property, so for example under the wear and tear rules you could claim a deduction of 10% of the rent but have to bear the cost for example of a replacement cooker, however under the new rules that cooker would be a tax deductible expense. Please note the rules only apply to replacements and not the original purchase of such items.

tax-return

If you are a landlord and need to replace items, you may wish to wait till April 2016 to make such purchases because if you bought them before the new rules start then you would not be able to claim the cost of them as an expense and you are already entitled to wear and tear allowance (if you qualify) whether you replace items or not but by waiting till after the new rules start you can claim the whole cost of the replacement in your 2016/2017 tax return.

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