Is Wear and Tear Allowance worn out?
10th December 2013
If you are an owner of a property that is not fully furnished then from April 2013, you have lost a valuable tax relief.
Prior to 5 April 2013, you were able to claim a wear and tear allowance, if the property was fully furnished, in other words had more than simply white goods, based on 10% of gross rents less certain expenditure.
Alternatively a renewals basis could apply, where you instead claimed the cost of replacing items.
From 6 April 2013, the renewals basis has been abolished. There is no longer any relief for replacing items, whether through careless damage or every day wear and tear. The 10% wear and tear allowance for fully furnished properties is all that remains.
If you currently let your property partly furnished, it may be worth considering making it fully furnished, so that you can claim the wear and tear allowance.
‘Fully furnished’ is gauged by the Inland Revenue as the ‘toothbrush test’, in other words the tenant could take up occupation with the addition only of personal items. Apart from functioning kitchens and bathrooms, it must include tables, chairs, beds, sofa, flooring and curtains. Style and fashion are not relevant, although clearly what is fully furnished for a student let would not be the same as a luxury flat in a city centre.
Be wary of any request to remove furniture by the tenant, either to create space or so that the tenant can bring his own furniture, as this may mean you lose the right to claim the 10% wear and tear allowance.
