I don’t usually like to go into legislation changes and the like too often on this blog, but I have been asked by a few existing Landlords over the last 10 days or so about the changes to Wear and Tear Allowances for residential Landlords from April 2016.  So I thought I would give you a brief overview of the impending changes.

The current Wear and Tear Allowance allows Landlords to reduce the tax they pay on rental profits by 10% regardless of whether they have actually replaced any of the furnishings in their rental property in that tax year.  This is set to be replaced on 6 April 2016 and Landlords will only be able to deduct the costs that are actually incurred when replacing furnishings in the rental properties.

The good news is that all Landlords of residential dwelling houses, no matter what the level of furnishing, are eligible for the allowance.  This differs from the existing allowance which only applies to fully furnished properties.

Landlords will be able to claim for the cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant’s use.  However ‘betterment’ or improvements to the existing furnishings will not be permitted.  For example, replacing a washing machine with a washer-dryer is an improvement so you would only be entitled to claim for the cost of a washing machine.

The new allowance will not apply to the cost of furnishing a rental property for the first time after purchase and will only cover the replacement of existing furnishings.  The only exclusions are furnished holiday lets and commercial properties.

If you’re thinking of changing any furnishings or appliances in your property that don’t urgently need doing before April is to sit tight until after the changes when the costs become deductible.

If you would like some free advice on how the new Wear and Tear Allowance will affect you please give me a call on 01489 570011 or drop me a line at james.hill@brooklettings.co.uk.

To keep up to date on the property market in Locks Heath and Park Gate and receive impartial Buy-To-Let deals and advice read The Locks Heath Property Blog.