Published 27th March 2017

The 10% Wear and Tear Allowance was introduced in 1975-76 as an alternative to the replacement basis for calculating a deduction for replacing items of furnishings or equipment in a fully furnished residential letting property. In 2013 the replacement basis was withdrawn. Now the Wear and Tear Allowance has been withdrawn with effect from 5th April 2016.

From 5th April 2016 (1st April 2016 for company landlords paying corporation tax) there is a new relief. This relief provides a deduction for the cost of replacing items of furniture or equipment when computing the taxable profit, subject to several conditions:

  • ‍The person claiming the deduction must have a property business that includes a dwelling house
  • The item being replaced must be available for the exclusive use of the tenant
  • The replacement is on a “like for like” basis with no element of improvement.

The “like for like” restriction means that where a replacement item includes an element of improvement then only part of the cost is allowable. The part that is allowable is what the cost would have been on a like for like basis (i.e. with no improvement element).

As with the previous allowance, there is no allowance for the initial furnishing and equipment in a property.

These rules do not apply to a furnished holiday letting where capital allowances are available.