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Reform of the wear and tear allowance for residential landlords

Whos is likely to be affected

Companies, individuals and others, such as trusts or collective investment schemes that let residential properties

General description of the measure

The Wear and Tear Allowance for fully furnished properties will be replaced with a relief that enables all landlords of residential dwelling houses to deduct the costs they actually incur on replacing furnishings, appliances, and kitchenware in the property.

The relief given will be for the cost for the like for like, or nearest modern equivalent, replacement asset, plus any costs incurred in disposing of, or less any proceeds recieved for, the asset being replaced.

Background to the measure

This measure was announced at Summer Budget 2015, a consultation was held from 17th July to 9th October 2015

Detailed proposal

Effective date

The measure will have effect for expenditure incurred on or after 1st April 2016 companies and 6th April for income tax payers.

Proposed revisions

The deduction will be available in calculating the profits of a property business which includes a dwelling house. The deduction is available for capital expenditure on furniture, furnishings, appliances (including white goods) and kitchenware, where the expenditure is on a replacement item provided for use in the dwelling.

The amount of the deduction is:

  • The cost of the new replacement item, limited to the cost of an equivalent item if it represents an improvement on the old item (beyond the reasonable modern equivalent) plus

  • The incidental costs of disposing of the old item or acquiring the replacement less

  • Any amounts received on disposal of the old item

This deduction will not be available for furnished holiday lettings because capital allowances will continue to be available for them.

The renewals allowance for tools at section 68 ITTQIA 2005 and section 68 CTA 2009 will no longer be available for property businesses.

Impact on individuals, households and families

This change will create an additional administrative burden for individual landlords who currently claim the wear and tear allowance as they will now need to keep a record of their actual expenditure and exclude any elements of improvement.


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