If you have an investment property, you are probably familiar with the wear and tear allowance.
It is used to provide tax relief to landlords for the cost of replacing furnishings in rented residential accommodation.
This was a set 10% of your net rental income and just made it an easier calculation rather than having to keep a record of all furniture expenditure.
From 6 April 2016, the wear and tear allowance will be scrapped which will affect your property tax.
In it’s place will be a renewals allowance. This will mean you can get a tax deduction for furniture or equipment that is a like for like replacement. The trouble is it has to be a like for like replacement so if you buy a TV for £450 but replace it with a 4k TV for £700, you will only get a tax deduction for £450. If you then replaced the £700 4k TV with another 4k TV for £950, you would get a tax deduction for the £950 because it is a like for like replacement.
So if you are intending to replace furniture or equipment, it would be better to wait until 6 April so that you don’t lose any wear and tear allowance and get a full renewals allowance.
