Half of UK landlords set to be affected by wear and tear tax change

Taylor Scott International News

Almost half of landlords in the UK will be affected by the removal of the annual wear and tear allowance announced recently in the summer Budget, research has found. According to new findings from the National Landlords Association (NLA) the change which is due to take effect in April 2016 will affect 47% of landlords. It says that 24% of landlords let their properties fully furnished, 22% are letting a mixture of furnished and unfurnished properties and 53% let their properties on an unfurnished basis. The annual wear and tear allowance is currently available for furnished properties and it will be replaced with a tax relief system that enables all landlords to deduct the costs they actually incur on replacing furnishings in the property. The new system, currently under consultation until the 09 October 2015, will apply from 06 April 2016 for Income Tax purposes and 01 April 2016 for Corporation Tax, and will cover the cost of replacement furniture, furnishings, appliances and kitchenware provided for tenants. This will include movable furniture and furnishings, televisions, fridges and freezers, carpets and flooring, curtains, linen, crockery and cutlery. ‘We fully understand the frustration of those landlords who let exclusively on a furnished basis as the removal of this allowance will very likely represent a reduction in the relief they can claim,’ said Chris Norris, NLA head of policy. ‘However, it will come as a welcome revision for those letting a mixed portfolio, unfurnished, or part furnished property as the replacement system will allow them to deduct legitimate revenue expenses in the future,’ he pointed out. ‘The NLA has broadly welcomed these proposals as it should lead to a fairer system for more landlords. However, as we transition from one system to another, we will push to make sure that any landlords who’ve made recent investments with the expectation of offsetting the cost over a number of years using the current allowance, will not be disadvantaged,’ he added. Continue reading →

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