For properties let as ‘fully furnished’ you can claim 10% of the net rents as a ‘wear and tear’ allowance. This can be claimed each year to help cover any repairs or replacements of furniture and fittings – such as carpets and curtains. However, it’s only applicable for furniture inside of the property which is let commercially for a minimum of 140 days per year (there are some other conditions that also apply).
Before 6 April 2013, the costs of providing items in an unfurnished or partly furnished property were eligible for reimbursement under the ‘renewals basis’. Now the guidance has been changed and renewal claims only apply to small furnishings – such as lamps, microwaves and rugs. The change means there’s no tax deduction for larger free-standing furnishings like fridges, cookers and carpets. Replacing fixed items, such as a fitted oven or hob in a fitted kitchen are classed as ‘repairs’ and the cost is deductible as described here.
However, by law you may still receive a deduction for ‘any implement, utensil or tool’ used for your rental business. The taxman interprets this as only items of small value, but the legislation doesn’t refer to the value of the items at all. This means that ‘any implement, utensil or tool’ is open to interpretation and we strongly recommend that if you follow the law rather than the taxman, you make sure this is explained on your tax return.
If you’ve any queries or would like our guidance on this, please get in touch with us before moving forward with your claims. Just give us a call on 01782 279615.