Can anyone advise on the current position for claiming 10% wear and tear allowance on rental properties?
Historically I have claimed this on partially furnished properties, but have been informed by HMRC that from 2013/14 it is only allowable on fully furnished properties, is this correct?
Thanks.
Replies (15)
Please login or register to join the discussion.
the legislation requires
"sufficient furniture, furnishings and equipment for normal residential use". (Ittoia S308B).
Historically you should not have been claiming W&T either
The new legislation introduced for 2013/14 enacted the W&T concession. The 10% W&T allowance has always only been available where there was sufficient furniture etc for normal use. Strictly you should amend the prior years returns where you have incorrectly claimed W&T.
At the same time that the legislation was introduced, the renewals basis (where you could claim replacement cost of items, but not the initial purchase cost) was removed so it is no longer possible to claim for the renewal of items eg carpets, white goods, furniture in partly furnished and unfurnished properties. Bad news for landlords of this type of property.
It may also be worth knowing that
it does not apply to the fixtures that are an integral part of the buildings (baths,washbasins etc) You can only claim W&T Allowance on furnished properties (Click here) within UK excluding furnished holiday lettings.
The legislation was not introduced in 2013/14
It has been there since 2011/12, but the "furnished" requirement under the former concession was not significantly different.
Can you claim for renewals?
I thought you could still claim for renewals. This thread, https://www.accountingweb.co.uk/anyanswers/question/furnished-except-beds , seems to say you can, but not being the sharpest tool in the box, I could be wrong.
Apologies and correction re renewals basis
Is like the goddam Twilight Zone some days!
Absolutely correct. Please accept my apologies. Thanks to PNL's succinct and in-character drawing of this to my attention, I have edited my comment to (hopefully) make more sense, although I am sure PNL will point out why it still doesn't.
But wont work for 2013-14
Can only be furnished from the date that the contents fit the W & T definition
This article from Taxation may help
http://www.taxation.co.uk/taxation/Articles/2013/01/23/298411/wear-and-tear
To quote -
The legislation is straightforward in that it says that the dwelling house must have “sufficient furniture, furnishings and equipment for normal residential use” (ITTOIA 2005, s 308B(1)(b)).
In other words, a tenant needs to be able to move in and live without being required to provide anything other than their clothing and food.
They may of course, in reality, feel the need for high-definition television, computers, games consoles, a food mixer or some other piece of equipment they choose to bring in, but they could live in the property without it.
“Normal residential use” is a somewhat vague term and what is necessary may change over time but, in general, certain items such as beds, chairs, tables and a cooker are pretty much essential.
Some landlords will try to stretch this definition, but a camp bed and microwave are probably not going to be enough to convince.
Hi
can anyone assist with the accounting entries for the wear & tear allowance?
How would it effect the balance sheet?
Wear and Tear as it was is a tax deduction just like capital allowances. If it was a limited company the only adjustment I can see is a reduction in Corp Tax. For unincorporated businesses I can see no reason that it be included at all.
Too slow, in waiting two years to respond to this ancient question you've missed your chance and the wear and tear allowance has been axed.