Wear and Tear Allowance for Landlords

The wear and tear allowance was available to registered landlords with HMRC who rented out furnished properties. It was actually abolished from the tax year beginning 6 April 2016 meaning changes in the way landlords claimed for the cost of replacing furniture.

In this guide, I’ll explain more about the HMRC wear and tear allowance, why it was abolished and how landlords claim for costs against their rental profits.

What is Wear and Tear Allowance?

Wear and Tear Allowance is available to landlords renting out a furnished property.  It is a deduction against rental profits and is calculated at 10% of rent less rates (commonly referred to as net rent).

How to Calculate the Allowance

The allowance was a flat rate deduction against rental profits, calculated at 10% of rent less rates (commonly referred to as net rent).

Here’s an example:

A landlord rents out a furnished property at £1,200 pcm and pays rates of £1,400 for the year.  Therefore the landlord is able to deduct wear and tear allowance from their rental profits for the year of £1,300.

Why Was Wear and Tear Allowance Abolished?

The allowance was available up to 5 April 2016 regardless of true spending meaning it was in landlords interests to not replace furnishings but claim for the allowance regardless.  In reverse, if a landlord had a high amount of furnishings to replace on a regular basis then the allowance may not sufficiently cover these costs.

Since being abolished, landlords can now claim for the actual cost of replacements to furnishings that they have paid for. So for example, if a sofa is replaced the landlord can claim for the actual cost of buying that new sofa.


About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek and money nerd helping financial DIY-ers organise their money so they can hit their goals quicker.