Almost half
(47%) of landlords will be affected by the removal of the annual wear and tear
allowance, according to new findings from the National Landlords Association
(NLA).
The research
shows that a quarter of landlords (24%) let their properties fully furnished,
with 22% letting a mixture of furnished and unfurnished properties. Just over
half of landlords (53%) let their properties on an unfurnished basis.
The news
comes shortly after the government announced its intention to scrap the annual
wear and tear allowance – which is only available for furnished properties –
and replace it with a tax relief system that enables all landlords to deduct
the costs they actually incur on replacing furnishings in the property.
The new
system, currently under consultation until 9 October 2015, will apply from 6
April 2016 for income tax purposes and 1 April 2016 for corporation tax.
It will
cover the cost of replacement furniture, furnishings, appliances and
kitchenware provided for tenants including:
- Movable furniture and furnishings
- Televisions
- Fridges/freezers
- Carpets and flooring
- Curtains
- Linen
- Crockery or cutlery
Chris
Norris, head of policy at the NLA said: “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.
“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.“
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