Wear and Tear allowance

Wear and Tear allowance

Didn't find your answer?

I am in profession and need to resubmit a personal tax return for a client.

My client needs to restate his rental income in 2015/16. At that time a 10% wear and tear allowance was in place. The allowance was stopped in March 16 and a new relief for replacing furnishings were introduced

Would he be able to claim the 10% wear and tear allowance now when resubmitting his 15/16 tax return?

 

Replies (12)

Please login or register to join the discussion.

Psycho
By Wilson Philips
11th Jan 2021 21:45

How do you propose to resubmit a tax return for 2015/16?

Thanks (3)
RLI
By lionofludesch
12th Jan 2021 10:22

As Wilson says, you may have overlooked a more fundamental problem.

But, to answer the original question, entitlement to wear and tear is still there for 2015/16, if you can coax HMRC to re-open that return.

Thanks (2)
Replying to lionofludesch:
avatar
By accountingdude
12th Jan 2021 11:53

I am reporting under world wide disclosure facility. The client forgot to disclose his rental income. I will let him know he can get 10% wear and tear allowance for 15/16. Thanks for your help - much appreciated.
Do you know if a certain election needs to be made to claim wear and tear allowance? It should be said that the rental income is from a flat abroad.

Thanks (0)
Replying to accountingdude:
avatar
By Wanderer
12th Jan 2021 12:16

I wouldn't do it under the Worldwide Disclosure Facility. I'd do it under the Let Property Campaign.

Don't worry about any W&T election. Just base your calculations on the net amount after including W&T.

ALSO make sure there is an extra liabilty, after taking into account any Foreign Tax Credit, before you even begin to make a disclosure..

Thanks (0)
Replying to accountingdude:
Psycho
By Wilson Philips
12th Jan 2021 12:18

Thank you for clarifying. Reporting under the worldwide discloure facility (or let property campaign) is a little different from "resubmitting his 15/16 tax return"

Thanks (0)
avatar
By accountingdude
12th Jan 2021 20:53

The foreign tax paid on the rental income was 10%.

Suppose it is possible to get a Double taxation relief for this foreign tax suffered.

Should the foreign tax be offset against the UK tax payable or should the foreign tax be entered as a deductible expense? It seems this is what HMRC suggest, in their communication.

Thanks (0)
Replying to accountingdude:
Psycho
By Wilson Philips
12th Jan 2021 21:06

What do HMRC suggest, and why? Has the foreign tax been deducted in accordance with the applicable DTA?

Thanks (1)
Replying to Wilson Philips:
avatar
By accountingdude
12th Jan 2021 21:43

HMRC asks for a breakdown of the calculation and a disclosure of the foreign taxes paid. Maybe I misunderstood, guess it should be possible to claim foreign taxes against UK tax liability.
Need to see if I can find the DTA.

Thanks (0)
Replying to accountingdude:
avatar
By Homeworker
13th Jan 2021 10:57

Quote:

The foreign tax paid on the rental income was 10%.

Suppose it is possible to get a Double taxation relief for this foreign tax suffered.

Should the foreign tax be offset against the UK tax payable or should the foreign tax be entered as a deductible expense? It seems this is what HMRC suggest, in their communication.


There should be no problem claiming double taxation relief for a European country, or indeed most countries around the world, and it is better to adopt this approach than to deduct the tax paid as an expense. Just make sure you limit the amount claimed in the tax return to the UK tax due on that source.
p.s. no separate election required.
Thanks (1)
Replying to Homeworker:
By SteveHa
13th Jan 2021 12:03

Quote:
There should be no problem claiming double taxation relief for a European country, or indeed most countries around the world

Or, indeed, any country with no DTA via unilateral relief.

Thanks (0)
avatar
By accountingdude
13th Jan 2021 00:05

On another note:
The letting agent took 6 weeks rent as a fee after one year the contract was extended for another year. It costed 500 GBP to draw up this amended contract. Would these two expenses be deductible?

Thanks (0)
Replying to accountingdude:
Red Leader
By Red Leader
13th Jan 2021 11:03

How long have you been doing this tax lark?

Thanks (2)