From April 2016, a new relief for the replacement cost of furnishings in a residential property replaces wear and tear allowance.
From 1 April 2016 (for companies) or 6 April 2016 (for individuals), those letting residential property will no longer be able to claim a 10 percent wear and tear allowance. Instead, relief can be claimed on the costs of replacing furnishings in let property. The new relief is available to both corporate and non-corporate landlords of residential property, and in respect of expenditure on unfurnished or part- or fully-furnished property. The relief will not, though, apply to properties let as ‘furnished holiday lettings’ or to commercial property lets, both of which are eligible for capital allowances on such items.
Landlords are likely to already be aware of the changes – the Government announced the change last year, following consultation over the summer. The relevant legislation is included in Finance Bill 2016, with the Bill published before Easter containing only minor amendments to last December’s draft clauses. With the relief taking effect this month, though, now seems a good time to recap on some key points.
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