Almost half of landlords hit by Wear and Tear tax change
Around 47 per cent of landlords will be affected by changes to the annual wear and tear allowance.
That’s the result of a survey by the National Landlords Association, following the announcement of the change in the Budget last month.
The research findings show that 24 per cent of landlords let their properties fully furnished, with 22 per cent letting a mixture of furnished and unfurnished properties. Some 53 per cent let their properties on an unfurnished basis.
This breakdown comes shortly after the government announced its intention to scrap the annual wear and tear allowance – which is only available for furnished properties – and replace it 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 October 9, will apply from April 6 next year for Income Tax purposes and April 1 next year for Corporation Tax. It will cover the cost of replacement furniture, furnishings, appliances and kitchenware provided for tenants including:
– Movable furniture and furnishings
– Carpets and flooring
– Crockery or 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. 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” says Chris Norris, NLA head of policy.