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…
5 Minute Read
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:
- fridges and freezers
- carpets and curtains
- crockery and cutlery
- cookers and dishwashers etc.
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 SimpleTax 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.
Trusted by over 10,000 subscribers
You don't need to be an expert to complete your self assessment tax return.
Managing your finances has never been so easy.
Start you self assessment tax return today for free.Get Started
45 allowable expenses you can claim when you’re a sole trader
13 Sep 2021
What vehicle, travel, hotel and meal expenses can you claim when you’re self-employed?
06 Sep 2021
The tax implications of becoming an accidental landlord
01 Sep 2021
How GoSimpleTax Works
Simply register for free with your full name and email address.
Select Your Income
Select the income you receive and follow the hints and tips for potential tax savings.
Validate Your Information
Validate your personal information and submit directly to HMRC to get confirmation in just seconds.
Work Anywhere, With Any Device
Gone are the days of fretting over a calculator surrounded by scraps of paper at the eleventh hour.
GoSimpleTax’s tax return software uses the information you upload in real time to calculate your income and expenditure, working out the tax you owe and sending you helpful notifications when there’s the possibility of a mistake.
"The software is intuitive and proved very easy to navigate. I found the whole process refreshingly simple. I saved a lot of money too!"
"Easy to use and value for money. Everything you need to do your tax."
"It fills in all the forms and sends them to the Inland Revenue. Not expensive either. Takes the stress out of doing your tax return online."