Abolishment of wear and tear allowance and new replacement furniture relief

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From 6 April 2016 the wear and tear allowance for the rental of furnished properties is no longer available and has been replaced with a deduction for the replacement of furnishings. 

The new deduction will be available for capital expenditure on furniture, furnishings, appliances and kitchenware where the expenditure involves the replacement of an item used in the rental property.  The amount that will be allowed as a deduction against rental income will be the cost of the replacement item, although this is limited to an equivalent replacement if the new item is an improvement on the original, plus any incidental costs of disposing of the old item or acquiring the replacement.  Any amount received on the disposal of the old item will be deducted and so reduce the allowable deduction for tax purposes. 

This new deduction does not apply to furnished holiday lets, which instead would claim capital allowances.   

If you need assistance with any related matters, please do e-mail Simon at simon.johnson@kpmg.co.uk