Thank you to our friends at the NLA for this article on the proposed changes to the ‘wear and tear’ allowances for landlords (published on 17^th July 2015)

The consultation, which will run for 12 weeks until the 9^th of October 2015, outlines proposals to replace the existing allowance with a relief that enables all landlords of residential dwelling houses to deduct the costs they actually incur on replacing furnishings in the property.

If unchanged, the new rules will apply form 6 April 2016 for Income Tax purposes and 1 April 2016 for Corporation Tax.

The relief will apply to landlords of unfurnished, part furnished and furnished properties – but not furnished holiday lets.

Further, it will only apply to replacement of furnishings and not the initial cost of furnishing a property.

It will cover the cost of replacement furniture, furnishings, appliances and kitchenware provided for the tenants use including:

·         Movable furniture and furnishings

·         Televisions

·         Fridges/freezers

·         Carpets and flooring

·         Curtains

·         Linen

·         Crockery or cutlery

The tax treatment of integral fixtures will not be effected.

Crucially, this move applies to landlords irrespective of the level of furnishing in a property and removes the need to determine what constitutes ‘furnished’.

The NLA has broadly welcomed these proposals, but will be calling for the introduction of transitional provisions to ensure that landlords who have recently invested in furnishings – planning to offset the cost over a number of years using the allowance – are not disadvantaged.

The consultation document is available to download here http://www.landlords.org.uk/sites/default/files/150715_Wear_and_tear_condoc.pdf

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