Wear and Tear allowance, changing from Part Furn to Fully Furnished

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    Wear and Tear allowance, changing from Part Furn to Fully Furnished

    Hi, I am aware that you can only claim wear and tear for fully furnished properties. I started with a part furnished property, providing bed, mattress, fitted wardrobe, blinds, sofa, rug, washing machine and fridge freezer. The tenants had their own dining table and chairs, cooking stuff cutlery and bedroom drawers. Having looked at what I can claim for Part Furnished it seems that I can only claim 'renewals' under the 'repairs' section. This is fine.
    However when the tenants moved out I bought their furniture from them (they were moving to SAfrica), and the flat is now rented out fully furnished. I intend to keep the property like this and keep renting it out fully furnished and so would like to start claiming wear and tear instead of 'renewals'.
    I have seen a number of things online to say, once you claim 'renewals' that's it for the duration you own the property, you can't start claiming 10% wear and tear, as you can't switch from one to the other. But I haven't found anything on the HMRC website to say this.
    Anyone got any idea if this is true, and if it still applies if you have become fully furnished?
    Thanks!!

    #2
    The issue is that you would be claiming twice.

    The 10% allowance is in place of the replacement / repair allowance, and once you've claimed the latter you can't claim the former.
    As far a I know, you can't claim the 10% allowance on "some of" the furnishings in a property.

    You have been actually been following the rules for a furnished property anyway, so you can just carry on using the same regime.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Sorry to crash this thread, but you sound knowledgeable JPK.

      I have a furnished property where I claim the 10%, but the furniture is getting old & tired, so I am considering discarding it for the next tenancy.

      Will I have a problem with not claiming the 10% any more?

      Comment


        #4
        HMRC love people not claiming allowances, they might send you a plaque!

        If you're switching to unfurnished, it doesn't matter, you just stop claiming the 10%

        I've no actual experience of this, and I'm much less certain of this than the situation in the OP's question.

        I don't think so.

        You've had a set of items that you have been claiming wear and tear relief on.
        These are unlikely to all simultaneously have reached 10 years old at the perfect point and be totally exhausted from a tax point of view.

        So let's imagine that you decide to replace everything (assuming that that's actually possible - everything not bolted to the structure seems a lot), some of the items will have had the benefit of some allowance and therefore you can't claim for their replacement.

        You might be able to make an argument that you have a replaced everything and change the basis if you only claimed the replacement value on items over 10 years old, but this seems a little constructed to me.
        And you're meant to be consistent across your tax return, so doing this for one of a number of properties would be problematic though.

        Confidence is about 65% on this one though.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Hi, thanks for your reply.

          I haven't actually claimed for anything yet, so I haven't been following rules for furnished property. I am just doing the first tax return for it for 2013/14.

          Ok, I've been doing a lot more trawling through HMRC documents...

          I've just found the following on the HMRC PIM3230 doc under Furnished Lettings 2012/13 and earlier..
          'Under the terms of the concession, whatever basis is chosen had to be followed consistently. It was not possible to chop and change between the wear and tear allowance and the renewals allowance from year to year.'

          As this isn't included in the 2013/14 HMRC notes, I'm wondering if it still applies?

          Looking at the tax form as it is, there isn't a box just for replacement/repair allowance.

          There is a box for 'Property Repairs, Maintenance and Renewals' which looks like it covers cost of Repairs and Maintenence of the building (roof, painting exterior, damp repair etc). And then 'Renewals' of small items -like cutlery, not furniture. In the notes it says: The renewals allowance for the cost of replacing furniture, furnishings or machinery is no longer available for 2013–14 and the years that follow. For more information read PIM3230 in the Property Income Manual. Go to hmrc.gov.uk/manualsa-z

          As this says this 'Renewals Allowance' is no longer available for 2013/14, again I'm wondering if the system has changed.. and you can now switch from not claiming Wear and Tear (as an unfurnished, or part furnished) to claiming it (as a fully furnished)? Otherwise, if you start as unfurnished, you would never be able to claim for any cost of furniture replacement/wear and tear, if you became furnished in the future...

          Thanks

          Comment


            #6
            As per my responses above, I don't see how you could practically even if you wanted to and it was allowed.

            The notes about furniture, furnishings and machinery is because HMRC have removed a previously established policy that said that these items could be allowed for under the repair/replacement option, and now they are not allowable.

            Following the 10% rule is pretty much a no brainer for most furnished property landlords as so much of what is in the property falls into that category.
            It used to be a complicated decision, but it's not so much any more.


            I'm not actually sure why the questions arises from the OP (while I can see JKO's point entirely).
            Are you looking for a loophole of some kind.
            Last edited by jpkeates; 16-01-2015, 19:29 PM. Reason: Made a reference to a different tax regime
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment


              #7
              Hi, Thanks for the reply,

              No I'm not trying to look for a loophole.

              I thought that you can only claim 10% Wear and Tear, on Fully Furnished properties. As I am doing the accounts for when it was Part Furnished at the moment I can't claim this. I was just wondering what happens when I do my accounts for next year, as my property is now Fully Furnished and whether I could then start claiming Wear and Tear.

              Further more, from what I've read, the 10% Wear and Tear allowance is based on the rental income, but it sounds from what you are saying you believe it to be the cost of the furniture etc?

              Comment


                #8
                The 10% is definitely calculated on the rental income.
                However it's to cover the costs associated with the wear and tear (essentially depreciation) on specific things.

                I've edited my post because what I posted said the opposite, which was stupid.
                I copied a paragraph that I didn't intend to include.
                Many apologies.

                Your "part furnished" property (for tax purposes) is either furnished or not.
                There's no half way house for tax.

                I'd have thought that the 10% option is better long term (and the repair/replace option better this year)?
                When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                Comment


                  #9
                  Hi thanks
                  I've realised my initial question wasn't very clear at all!! When i said that I wondered if I could claim renewals, and then wear and tear when it was fully furnished, I meant in the next tax year, rather than on the same return. So yes, what you say I could claim Renewals one year then Wear and Tear in the future.

                  My main initial query was because I have read on a couple of sites that you have to choose either renewal or W&T for the duration of the property ownership! So you couldn't choose one one yr and a different one the next. Which I'm not sure is true, that's why I was searching through HMRC docs to find where they say that.

                  Having read what I've read, I'm pretty convinced that you can switch. Sorry my question was so jumbled!!!

                  Comment


                    #10
                    My belief is that you can't switch from tax year to tax year.
                    I'm confident of that in the situation you describe, less so in the unusual situation JKO outlined.

                    I also suspect that HMRC would expect the same approach across your property business not varying by property. Which might actually give JKO his answer as well.
                    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                    Comment

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