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Wear and tear allowance

Half of landlords affected by removal of wear and tear allowance

Almost half (47 per cent) of landlords will be affected by the removal of the annual wear and tear allowance, according to new findings from the National Landlords Association (NLA).

The research findings show that a quarter of landlords (24 per cent) let their properties fully furnished, with 22 per cent letting a mixture of furnished and unfurnished properties.

Just over half of landlords (53 per cent) let their properties on an unfurnished basis, the new report says.

The news comes shortly after the government announced its intention to scrap the annual wear and tear allowance – which is only available for furnished properties – and replace it with a tax relief system that enables all landlords to deduct the costs they actually incur on replacing furnishings in the property.

The new system, currently under consultation until 9th October, will apply from 6th April 2016 for Income Tax purposes and 1st April 2016 for Corporation Tax, and will cover the cost of replacement furniture, furnishings, appliances and kitchenware provided for tenants including:

Movable furniture and furnishings

  • Televisions
  • Fridges/freezers
  • Carpets and flooring
  • Curtains
  • Linen
  • Crockery or cutlery

Chris Norris, Head of Policy at the National Landlords Association, said: “We fully understand the frustration of those landlords who let exclusively on a furnished basis as the removal of this allowance will very likely represent a reduction in the relief they can claim.

“However, it will come as a welcome revision for those letting a mixed portfolio, unfurnished, or part-furnished property as the replacement system will allow them to deduct legitimate revenue expenses in the future.

“The NLA has broadly welcomed these proposals as it should lead to a fairer system for more landlords.

“However, as we transition from one system to another, we will push to make sure that any landlords who’ve made recent investments with the expectation of offsetting the cost over a number of years using the current allowance, will not be disadvantaged.”

Harvey Harding

Harvey has over 10 years practical legal experience within private practice and is responsible for PM Law’s Property, Wills, Trust and Probate, Employment and Civil Litigation teams. Harvey is a practising solicitor and is committed to ensuring clients receive a seamless, straight-forward, quality service.