Reform of the Wear and Tear Allowance

Topic Author:

Claire Turner

Topic posted on:

9:34 GMT 10.12.15

Post Author Date

Legislation will be introduced in Finance Bill 2016 to repeal the Wear and Tear Allowance provisions and make new provision for a deduction for the replacement of furnishings.

The deduction will be available in calculating the profits of a property business which includes a dwelling-house. The deduction is available for capital expenditure on furniture, furnishings, appliances (including white goods) and kitchenware, where the expenditure is on a replacement item provided for use in the dwelling.

The amount of the deduction is:

  • the cost of the new replacement item, limited to the cost of an equivalent item if it represents an improvement on the old item (beyond the ‘reasonable modern equivalent’) plus
  • the incidental costs of disposing of the old item or acquiring the replacement less
  • any amounts received on disposal of the old item

This deduction will not be available for furnished holiday lettings because capital allowances will continue to be available.

If you would like to discuss this further, please contact a member of the Beavis Morgan personal tax team on 020 7417 0417.

Claire Turner

9:34 GMT 10.12.15