Capital allowances/ wear and tear allowance

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  • Tax Accountant
    replied
    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

    Leave a comment:


  • musicman
    replied
    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?

    Leave a comment:


  • smythie
    replied
    Many thanks Ramnik.

    Smythie

    Leave a comment:


  • Tax Accountant
    replied
    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

    Leave a comment:


  • smythie
    started a topic Capital allowances/ wear and tear allowance

    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

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  • Reply to Damaged artwork expense
    by jpkeates
    If something is purchased wholly and exclusively for the business it's an allowable expense of one kind or another.
    It doesn't have to be a sensible thing to buy, it just has to have been bought for the business.

    If it were a gift it would not be allowable, but it's hard to see how...
    27-09-2021, 08:10 AM
  • Damaged artwork expense
    by jtufty
    Hi all

    Silly minor question really. Last week the tenant accidentally knocked a framed picture off the wall and smashed it. It was only a cheap thing (I guess value was £10). I went out and bought a replacement picture for her. (I know I didnt have to, but shes a good tenant). I bought...
    24-09-2021, 10:35 AM
  • Reply to Damaged artwork expense
    by ram

    As per above, as the place is "part-furnished", which will not incude pictures on walls.

    It's a gift to a stranger. ( They are not family, not close friends - etc. ) and not a claimable expence in any way..
    ...
    25-09-2021, 16:05 PM
  • Reply to Damaged artwork expense
    by nukecad
    I'd see this as an altruistic gift to your tenant and leave it at that.

    My previous LL (although he had his faults) used to buy the 3 of us in his small HMO a £20 case of beer each at Christmas, I doubt he tried to claim it off tax.
    25-09-2021, 15:46 PM
  • Reply to Damaged artwork expense
    by jtufty
    Its let "part-furnished". (she didnt have a bed, so I put a bed in there, and the white goods, and the [now-broken] picture and a few other bits n bobs)...
    25-09-2021, 15:13 PM
  • Reply to Damaged artwork expense
    by Section20z
    You don't need to write anything. Retain the receipt and just include the appropriate amount in youR expenses/capital totals...
    25-09-2021, 13:57 PM
  • Reply to Damaged artwork expense
    by ram

    We assume the place is let as furnished ?

    I don't think pictures are classed as furniture / but then again, a mirror screwed to the wall - if broken by the tenant, then the tenant pays.
    So pictures ? not sure.
    I would charge the tenant the cost of replacement.
    ...
    25-09-2021, 11:43 AM
  • Reply to Damaged artwork expense
    by jtufty
    Thanks guys. I dont know what came over me! A momentary wave of altruism. Most unlike me!

    I have the receipt. What should I log it as? Should I literally just write "capital expense" or should I be more specific such as "replacement of broken picture"?
    25-09-2021, 06:45 AM
  • Reply to Damaged artwork expense
    by jpkeates
    It's a replacement item of furniture and its allowable as such.
    There's an inevitable element of betterment when you replace one thing with another.

    And £40 is neither here nor there as a capital item.
    24-09-2021, 13:16 PM
  • Reply to Damaged artwork expense
    by Section20z
    That sounds definitely like an improvement as you didn't have to splash out £50 you crazy dude.
    £10 down to repairs and £40 capital expense I reckon.
    24-09-2021, 11:59 AM
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