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According to the National Landlords Association (NLA), 47 per cent of landlords will be affected by the government’s removal of the annual wear and tear allowance. They are welcoming the changes as they say the new system will be fairer to landlords, but they are warning that some new landlords could be disadvantaged if they made recent investments with a view to offsetting the costs over future years.
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NLA research has found that 24 per cent of landlords let fully furnished properties and 22 per cent let partly furnished properties, with 53 per cent letting their properties unfurnished.
New Landlord Tax Allowance
The old wear and tear allowance was only available for furnished properties whereas the new system enables landlords to claim tax relief on costs incurred as a result of having to replace furnishings in a rental property, including televisions, white goods, carpets, curtains, movable furnishings, cutlery and crockery.
A Fairer System Says NLA
“We fully understand the frustration of those landlords who let exclusively on a furnished basis as the removal of this allowance will very likely represent a reduction in the relief they can claim,” says Chris Norris of the NLA.
“However, it will come as a welcome revision for those letting a mixed portfolio, unfurnished, or part-furnished property as the replacement system will allow them to deduct legitimate revenue expenses in the future.”
The new tax allowance will come into effect from April next year (there is currently a consultation process in place, which runs until October 9th).
