Wear and tear allowance

Wear and tear allowance

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Should the service charge for a flat be deducted before calculating the 10%? It's an annual amount amongst the leaseholder, which I guess mostly goes to the upkeep of the building and is carried forward against major repairs. It would not be due by the tenant, but by the leasholder... I am not clear after reading HMRC's guidance.

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By Cathy R
17th Oct 2014 11:47

No

The W&T allowance does not need to be reduced for this.

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By roseorgan.fsbdial
17th Oct 2014 12:08

I agree with Cathy

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By User deleted
17th Oct 2014 13:56

For W&T ...

... essentially rent less utilities and property taxes

 

PIM3210 says

If the landlord pays any expenses that would normally be borne by the tenant, then these are deducted from the receipts to arrive at the relevant rental amount. The type of expense that would fall to be deducted include the utilities bills (gas, water, electricity), council tax or, in Northern Ireland, domestic rates.

The 10% is calculated only on the net rent from the furnished lettings. Any rent from unfurnished lettings is excluded from the calculation as are any expenses from these lettings that would normally be borne by the tenant.

Service charges relate to communal areas, not the landlords property, so they would not be excluded.

Another way to look at it is that the service charge will be there whatever, the utilities etc are dependant to whatever extent on occupation.

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By roseorgan.fsbdial
20th Oct 2014 11:41

So are you saying that service charge should be deducted from rent on furnished lettings before calculating the W&T allowance?

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By User deleted
20th Oct 2014 17:01

No at all ...

... complete opposite, service charge is not deducted before computing W&T allowance.

 

 

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By roseorgan.fsbdial
20th Oct 2014 16:51

Thank you for clarifying!

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