Do you receive income from a furnished residential property? Claim wear and tear allowance.

Please note: This tax relief is no longer available. Read our guide ‘An essential guide to landlord tax‘, it covers what you need to know as a landlord. Do you receive income from a furnished residential…

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Last Updated: 23rd March 2023

Please note: This tax relief is no longer available. Read our guide ‘An essential guide to landlord tax‘, it covers what you need to know as a landlord.

Do you receive income from a furnished residential property? If so, you may be eligible to claim what is known as the ‘wear and tear allowance.’ Let us explain.

What is a furnished residential letting?

Firstly, we must look at what constitutes a furnished letting, because after all, if your property doesn’t qualify as a HMRC approved ‘furnished letting,’ you won’t qualify for wear and tear allowance. So, legislation states that a furnished residential property must have “sufficient furniture, furnishings and equipment for normal residential use.” Basically, this means that a tenant should be able to move into a house that is totally liveable, containing such things as wardrobes, drawers, beds, tables etc. Obviously there is no need to stock the fridge with food for the coming months, but basic essentials are a must for a furnished letting. So where does this wear and tear allowance fit in?

What is the 10% wear and tear allowance and what does it cover?

The 10% wear and tear allowance is designed so landlords can claim a relief for the depreciation of plant and machinery within a residential property. The wear and tear allowance is 10%, and you calculate this by taking 10% of the net rent received for the furnished residential letting. To work out net rent, you must deduct charges and services that would usually be borne by a tenant but are in this case, borne by the taxpayer (such as water and sewerage, council tax etc).

The 10% wear and tear allowance covers the cost of the extra furnishings you wouldn’t expect to find in a furnished letting, and certainly wouldn’t get in an unfurnished letting, such as cutlery, carpets and a television etc. But then again, this is where confusion is caused, because after all, what is an ‘extra’ furnishing, and what is essential?

Here are some examples of furnishings covered by the wear and tear allowance:

  • beds
  • televisions
  • fridges and freezers
  • carpets and curtains
  • linen
  • crockery and cutlery
  • cookers and dishwashers etc.

Renewals

In addition to the 10% wear and tear allowance, there’s also a ‘renewals basis.’ Basically, if you need to renew or repair any fixtures or fittings that are an essential part of your furnished residential property, then you can deduct the net cost. The net cost is the cost of the replacement minus any amount received for the old furnishing. The renewals basis covers the same types of furnishings as wear and tear allowance, but be warned, if you have already claimed wear and tear or capital and machinery allowance on said furnishings, then you cannot claim on a renewals basis!

How GoSimpleTax can help

You may be asking yourself, how does GoSimpleTax make this easier? Well it couldn’t be easier. To claim wear and tear allowance, just follow the steps below:

  • log in to your GoSimpleTax account
  • add a “Property” page (details/edit)
  • answer “yes” to “Is this a furnished residential letting?”
  • and “yes” to “Do you want to claim wear and tear allowance on these properties?
  • GoSimpleTax will do the maths for you.

If you would like to claim on a renewals basis, the steps are similar. Add renewals to your expenses and once again, we’ll do the maths for you. This is just one of many tax tips we have to offer.

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Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.

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