Hi All,
Just a quick (and probably basic- but haven't came across it yet) question, If you can only claim wear and tear allowances on fully furnished properties, where does that leave you if you rent a washing machine/dishwasher?
Surely a fully furnished property would have to include a washing machine? I'm of the opinion it's one or the other here, either allow the rental costs or claim W&T allowance, am I correct?
Thanks in advance
Replies (23)
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I would say ....
... although customary it is not necessary to have a washing machine to claim W&T, but if one is there it is covered by W&T, whether you buy or rent makes no difference.
I don't think you have the option of claiming the rent as an expense any more.
You can claim both
Claiming wear and tear allowance only precludes claiming expenditure on the provision of furniture.
A washing machine is not furniture.
White goods
I don't agree you can claim both. PIM3210 gives examples of what is covered by the W&T allowance including fridges and freezers. My understanding is that a dishwasher and a washing machine are to be similarly treated. i believe the ICAEW published a paper whejn the new rules came in that specifically mentioned white goods as covered by the 10%.
Yes well
I am going by the legislation, rather than HMRC misguidance.
And you are applying the "rules" agreed between HMRC and ICAEW/CIOT on the replacement of white goods under ITTOIA 2005, section 68, rather than the rental of white goods.
The latter is deductible under general principles of being revenue expenditure (otherwise than on the provision of furniture, which would be precluded by section 308C(2)(b)(ii)).
I am not convinced that HMRC and the ICAEW/CIOT have got the right answer under the law to the former either.
I pity the clients of people who just go by what they think the answer is, or what HMRC think the answer is, rather than reading and applying the law, quite frankly.
On a strict interpretation of the legislation ...
... I would agree with Portia.
It boils down, I think, to what one means by "furniture".
Rightly or wrongly, I suspect that HMRC would try to argue that it includes white goods. Until we've seen it tested, we won't know. I'd be inclined to claim a deduction but, if HMRC challenged, would probably take the practical approach and concede (after a couple of rounds) - the tax at stake is unlikely to worth the hassle.
Rightly or wrongly?
Rightly or wrongly, I suspect that HMRC would try to argue that it includes white goods.
I think you just mean wrongly! :)
If white goods were furniture, the word "equipment" in section 308B(1)(b) would be unnecessary.
EDIT: Although I see there are still people that think you can sit on, eat off, or sleep in a washing machine.
Nobody will admit
Rightly or wrongly, I suspect that HMRC would try to argue that it includes white goods.
I think you just mean wrongly! :)
If white goods were furniture, the word "equipment" in section 308B(1)(b) would be unnecessary.
EDIT: Although I see there are still people that think you can sit on, eat off, or sleep in a washing machine.
Nobody will admit to sitting on a washing machine, will they? I think, like a lot of aspects re tax, the purpose test would be on point.
That said ...
... it would appear if you split the rent in two and charged rent of "furniture" separately then the associated costs would be allowed.
At least that is my interpretation of s308 :o)
Tool
Surely Sec 380C (2) (b) (i) means that if you elect for W&T you cannot claim under Sec 68 for the replacement of any tool? A tool is defined as any "implement, utensil or article" and the dictionary definition of an implement is a "tool, utensil or other piece of equipment". To my mind, that covers a washing machine.
Yes but
Renting the washing machine (which is what the OP has asked about), is a different thing from renewing a washing machine.
And ...
... I don't think that rental of a washing machine amounts to alteration of a washing machine either.
And you are quite right, Portia - I was wrong to include "or rightly" above. I agree that I should have rightly referred to "wrongly" only.
See your point
You are of course correct on that, I was joining in on the general W&T aspect.
Define furniture?
furniture/ˈfəːnɪtʃə/
nounthe movable articles that are used to make a room or building suitable for living or working in, such as tables, chairs, or desks. the small accessories or fittings that are required for a particular task or function.
What is the difference between a fridge and a bedside table, they are both for storing things in, just so happens one is refrigerated.
To me the equipment would refer to lawn-mowers, vacuums, small hand held kitchen tools etc. in this context, not appliances.
To my mind white goods are sub-sets of furniture in the same way fruit and vegetables are sub-sets of plants. Furniture is a wide term without any prefixing clarification, e.g. street furniture, desk furniture, door furniture etc. If it ever came to court, my money would be on HMRC, but then judges are not renown for their sanity so I would probably lose!
One wonders why all terms in legislation are not defined within the legislation! Any commercial contract will define all terms used to ensure absence of doubt.
Actually, scrap that, it is exactly why they don't - HMRC want doubt as it gives them greater scope!
All the above though is speculation until there is a decided case, and as mentioned, with the amounts being so small I would tend to opt for caution.
Furniture
Hardly authoritative, I know, but have a look at John Lewis's website and tell me if you can find any white goods listed under kitchen furniture. I can't - because they're all listed under appliances or electrical items.
A more useful definition
In this context, can be found here: http://www.legislation.gov.uk/uksi/1988/1324/regulation/3/made?view=plain
Not really ...
In this context, can be found here: http://www.legislation.gov.uk/uksi/1988/1324/regulation/3/made?view=plain
... that is within the context of fire safety, in that context a combustible free standing cooker would not really be useful and it would be absurd to have the possibility of such being included in that piece of legislation. What would be useful is a similar type of definition within ITTOIA.
I agree ...
... but common usage of a word isn't legal definition in terms of tax until proven by a court, or a definition is provided in the legislaton!
Rent a washine machine?
I had no idea that it was possible to rent a washing machine or dishwasher. I struggle to think of any circumstances in which the owner of a furnished letting property would choose to rent a washing machine, rather than buying one for £250 or less at the aforementioned John Lewis, or why anyone would want to buy a washing machine and then rent it out to someone else. Perhaps, this is a niche market of which I am completely unaware.
When I were a lad ...
I had no idea that it was possible to rent a washing machine or dishwasher. I struggle to think of any circumstances in which the owner of a furnished letting property would choose to rent a washing machine, rather than buying one for £250 or less at the aforementioned John Lewis, or why anyone would want to buy a washing machine and then rent it out to someone else. Perhaps, this is a niche market of which I am completely unaware.
... you could rent anything at Radio Rentals. Back in the day when mortgages were around 15% and some 80% of my take home pay I rented my first washer/drier, and my TV and video player.
Ejusdem generis
Article means "thing". Following the words implement and utensil, it means an implement/utensil like thing; a thing that serves a function as an implement or utensil does.
Implement and utensil should be similarly interpreted. Taking the terms together, it is a test of function within the context of the business.
Therefore, simply read plant and machinery.
Ah I see
So really, they should have called them the Non-Electrical and Non-Combustible Furniture and Furnishings (Fire) (Safety) Regulations 1998.
We must point out their error without delay. I am just going to plug my armchair in.