The government has released details of a new tax allowance for landlords, which replaces the current wear and tear allowance.
Currently if you are a landlord of a residential property that you let furnished then you can claim a tax deduction for wear and tear of equipment and furniture you include with the property. The deduction is broadly equal to 10% of the rent you charge (i.e. it has no link to the cost of items).
From April 2016 the wear and tear allowance will be replaced with a renewal allowance
Unlike the wear and tear allowance which applies only to fully furnished property the new renewals allowance can be claimed by any landlord who includes one or more items of furniture or equipment in a property. It will apply to any item which doesn’t become part of the structure of the building.
The renewals allowance will only be given for the cost of replacing existing items. Where you let a property for the first time on or after 6th April 2016, and buy furnishings for it, you won’t be entitled to the allowance until you need to replace an item.
If you are planning on replacing items in your rental property in the next few months, then you would maximise your tax deductions by leaving it until after April 6th.
