Capital allowances/ wear and tear allowance

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Capital allowances/ wear and tear allowance

    Can someone help with the following questions?

    I understand you can claim tax allowance for certain equipment you use for your letting business. I think it includes items of office equipment, furniture etc, but as they are likey to be used for other things than just your letting business am I right in thinking that the cost must be apportioned. If so what is the percentage? Does this also apply to when I buy a new car?

    Second question.

    I have read another thread which states you can claim 10% wear and tear allowance for net rents received. Does this mean that if my rental income on non furnished property is for exampole £10,000 I can claim tax relief of £1000 each year?

    I would appreciate any help.

    Smythie

    #2
    Originally posted by smythie View Post
    Can someone help with the following questions?

    I understand you can claim tax allowance for certain equipment you use for your letting business. I think it includes items of office equipment, furniture etc, but as they are likely to be used for other things than just your letting business am I right in thinking that the cost must be apportioned. If so what is the percentage? Does this also apply to when I buy a new car?

    ANSWER: Capital allowances are no longer available for residential lettings business. And the items mentioned by you are certainly not furnishings. They fall into the category of equipments for which I suppose you can claim for any repairs and renewals allowance to the extent that they are used for the lettings business. Any claim must reflect the business use only. There is no set or accepted amounts. A car is best dealt with by way of mileage allowance claim at HMR&C published rates.

    Second question.

    I have read another thread which states you can claim 10% wear and tear allowance for net rents received. Does this mean that if my rental income on non furnished property is for example £10,000 I can claim tax relief of £1000 each year?

    ANSWER: Wear and tear allowance is claimed for FURNISHED lettings and not non-furnished lettings. There is no relief for the original cost of the furnishings, depreciation or capital allowances. Wear and tear is a simplified, and highly beneficial allowance available in lieu of the renewals allowance otherwise available for cost of renewing furnishings. To claim this, the property should be fully furnished.

    You can claim 10% of the net rents (gross rents less any tenant's expenses paid by the landlord, such as utility bills etc) each year regardless of whether or not you have replaced any furnishings or the cost of furnishings.

    Once you adopt the wear & tear allowance, you cannot switch back to the renewals allowance. You must stick to whichever method you have adopted for each property.


    I would appreciate any help.
    Smythie

    ANSWER: Hope above helps.
    See replies above.

    Ramnik
    Private advice is available for a fee by sending a private message.

    Comment


      #3
      Many thanks Ramnik.

      Smythie

      Comment


        #4
        Say after a few years of letting a property, a then wish to let it unfurnished, as that is what a new tenant wants, I would understand, that I cannot claim the 10% allowance.

        However, say after a further period of time, the property is let furnished again, can I then choose between the 10% or renewables?

        Comment


          #5
          Originally posted by musicman View Post
          Say after a few years of letting a property, a then wish to let it unfurnished, as that is what a new tenant wants, I would understand, that I cannot claim the 10% allowance.

          However, say after a further period of time, the property is let furnished again, can I then choose between the 10% or renewables?
          My hypothetical answer to your hypothetical question is that this should be acceptable.

          Ramnik
          Private advice is available for a fee by sending a private message.

          Comment

          Latest Activity

          Collapse

          • Reply to Van
            by AndrewDod
            As said unless you have at least 100 properties there is no way the van will be an allowable business expense. Stick to the ~50p/mile allowance....
            28-10-2021, 00:00 AM
          • Van
            by jase222
            Hi, I am looking to buy a van solely for my rental business,
            I was looking at leasing a van and was wondering about the tax side and if I can claim the amount or is buying outright a better option.
            I am not a Ltd company and do simplified accounts for mileage.
            I would be grateful...
            27-10-2021, 04:32 AM
          • Reply to Van
            by royw
            If you have another car they're more likely to accept the van as solely business use.
            27-10-2021, 17:57 PM
          • Reply to Van
            by jpkeates
            The safest thing of all is to simply claim the mileage allowance.

            To claim for a proper split in costs, you might be asked to show mileage records for all your business trips, which should match the proportion claimed.
            You'd also have to log the operating costs if you're going to...
            27-10-2021, 15:03 PM
          • Reply to Van
            by jase222
            What would do is 80% business 20% private, if say a van was 200per month could I claim 160 as a expense? Or something else
            27-10-2021, 14:49 PM
          • Reply to How is a mortgage overpayment accounted for?
            by Gordon999
            The net profit of £400 = £4800 per year which is subject to corporation tax at 19%. = £912.

            So reduction of mortgage loan for first year will be £3888...
            27-10-2021, 09:21 AM
          • How is a mortgage overpayment accounted for?
            by nick_noal
            Hi all,

            I own a buy to let property that is registered in a limited company and I would like to set up a regular overpayment each month to reduce the balance of the mortgage.

            When it comes to submitting the annual accounts, how would this overpayment be accounted...
            24-10-2021, 21:41 PM
          • Reply to Van
            by jpkeates
            Unless you have a huge portfolio or a very unusual business, HMRC isn't going to accept a vehicle as a legitimate business expense for a property investment business.

            They may never notice if you do your own returns, and you can claim the mileage that's solely for the business.
            27-10-2021, 08:21 AM
          • Reply to Van
            by Section20z
            Leasing every time - and allocate to the business.

            "If it appreciates, buy it. If it depreciates, rent it"
            27-10-2021, 08:02 AM
          • Reply to How is a mortgage overpayment accounted for?
            by nick_noal
            jpkeates,

            Thanks for your help 👍
            26-10-2021, 18:40 PM
          Working...
          X