Wear & Tear Allowance for Landlords ABOLISHED

Wear and Tear Allowance is abolished from 6 April 2016.  Wear and tear allowance was an allowance that was available to landlords of furnished rental properties until 5 April 2016 to reflect general the general wear and tear of furnishings in a property they rent out.

Why Was Wear and Tear Allowance Abolished?

Until 5 April 2016 landlords could claim a flat rate to reflect the general wear on the furnishings of a rental property such as: sofas, pots and pans or beds.  The allowance was available regardless of true spending so obviously 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, the wear and tear allowance may not sufficiently reflect these costs.

From 6 April 2016 the wear and tear allowance has been abolished and instead landlords are now allowed to claim for the costs of any actual replacements to furnishings that they have paid for. So for example if a sofa is replaced, a landlord can claim for the actual cost of buying that new sofa.

How to Calculate 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).

An Example of Wear and Tear Allowance

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.

Anita Forrest
About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - a UK small business finance blog where she shares help and advice with the self-employed community to make topics like registering a business, bookkeeping and taxes easy to understand.