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Landlords remain unaware of the removal tax allowance for unfurnished rental property

RLA
Written by RLA

As the RLA has previously reported the tax concession allowing landlords of unfurnished properties to claim for the replacement of white goods, carpets and curtains in unfurnished property was withdrawn by HMRC with effect from April 2013…

As the RLA has previously reported  the tax concession allowing landlords of unfurnished properties to claim for the replacement of white goods, carpets and curtains in unfurnished property was withdrawn by HMRC with effect from April 2013. 

HMRC have indicated they will review the impact of the change. In order to monitor how these changes are impacting in Landlords the RLA conducted a survey with the Chartered Institute of Taxation (CIOT) and ICAEW to find out if landlords were generally aware of the change in the tax rules its impact on the frequency Landlords change white goods and carpets.  It also asked if landlords would change from unfurnished lets to fully furnished or totally unfurnished as a consequence.

There were 628 responses and of these over 75% were not aware of the change in the tax rules. The majority of landlords provide white goods (74%), carpets (98%) and curtains (79%) in their unfurnished rental properties and just over half said the lack of tax relief would change the frequency the items were replaced while 63% will either stop providing such furnishings or become fully furnished.

Those landlords who change to fully furnished lets will then be eligible for the wear and tear allowance calculated as 10% of rents received. CIOT and ICAEW have written writing to HMRC, using the RLA survey results, highlighting that this will inevitably increase the cost to the exchequer compared to allowing renewals for unfurnished lets and that the tax change should be reversed.

 

You can read the RLA’s full guide to tax relief on furniture here

About the author

RLA

RLA

The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

12 Comments

  • As a tenant this is bad news, unfurnished properties are a must for lots of us, we cannot afford to pay extra for fully furnished properties, and that is what will happen. Also a property without carpets is cold. If it means bringing back the tax relief for landlords on white goods and carpets, then so be it.

  • The policy of not allowing for the replacement of such good like carpets and white goods will actually lead to the deteioration of the standard of housing. Landlords will let properties with detiorating carpets, the cost of replacing the carpets in a normal 3 bed house is over £1k is the landlord to take a hit on this cost. To keep a house in good condition carpets only have a reasonable life span of 7 years and 10 at the most

  • Now here’s a question …
    At what point does something become “fixed” ?
    In my flat, the carpets are glued down, so doesn’t that make them as “fixed” as the electrical sockets and switches screwed to the walls and the cabinets in the kitchen ? In fact, I think an argument could be made that these glued down carpets (which are due for replacement) are actually more “fixed” than the electrical accessories or kitchen cabinets which are only screwed in place.

    If I weren’t skint and earning “not very much” I’d consider challenging the ruling and asking HMRC in court to show how “not fixed” a glued down carpet is.

  • Hmmm, I think landlords will simply stop claiming for repairs and renewals and claim the 10% rent allowance instead irrespective of whether the property is fully furnished or not. I really don’t think the HMRC has the resource to actually police this and it would seem to be a “fair” exchange.
    Maybe this is the HMRC moving away from letting landlords claim for replacing carpets, white goods, curtains, etc. which easily becomes a fraudulent practice, and towards a, more simple, 10% rent allowance every year?

  • This is interesting concept
    So does this mean that new property can not claim tax relief on white goods and carpets

    As a land lord it’s a real pain to supply washing machine I would prefer not to
    Tenants in the main don’t look after then .
    Does this also mean fitted hobs and ovens

  • This is interesting concept
    So does this mean that new property can not claim tax relief on white goods and carpets

    As a land lord it’s a real pain to supply washing machine I would prefer not to
    Tenants in the main don’t look after then .
    Does this also mean fitted hobs and ovens when fitted .

  • I was aware of it – and think it is a farce. Who rents a flat with no floor covering?

    I totally re-carpeted and also bought all new white goods when I started with my two flats, last year, to have had no tax relief on these things .. I hope the law gets rescinded. SOON!

    I do not want to go fully furnished as there are tenants who need unfurnished and I fear there are other who would be put off by my choice of stuff, and I have no where to store anything that they do not want.

  • This is equating private rented properties with Local Authority or Housing Trust properties where an empty shell is provided. The replacement cost of white goods and carpets/curtains as a tax write off is a miniscule proportion to HMRC compared to landlords going for the 10% depreciation allowance. Who ever does their sums there needs a new calculator!

  • Utter insanity on the part of HMRC, there is a huge long term negative here on how the private rental sector will respond; and how the standard of housing will either decrease or the rent will go up. Much here is a break even issue for many landlords who provide properties (£300-600), and offer good standards to their tenants, carpets, white goods, etc., and renew as often as required. The higher impact is on lower cost rentals, tenants and investors will decline from zero or small margins and standards will decrease on the back of a UK housing shortfall. Nothing here makes sense, or is this just another cash grab by UK Gov, regulation and the revenue to bleed the private housing sector further. I’m now between tenants at one property, some things trashed, inc all carpets, reckon 2k spend to make all good for the next tenant. Thank you HMRC for your understanding of life ……… NOT

  • I think I can see both sides here. As a tenant I have inventory of my own and I personally would preffer Unfurnished properties but if I look at things from a landlord point of view this both good news and an opportunity to optimize each tenancy. Altho I love Simon’s question there. Property inventory is quite a sensitive topic. I’m peculiar how HRMC will hold its grounds on “fixed” and “not fixed” inventory.

    ps. I’m surprised that Only 75% of all property landlords were unaware.

    kind regards

  • It is totally wrong for HMRC to dis-allow landlords to claim this deduction against their income, it is a justifiable expense and after all it is generally only 20% of the costs you pay out that you get back.
    So what happens, landlords, don’t replace these items so frequently and the property deteriorates or does the landlord replace and increase rent. It is ridiculous to market a property to let without providing at least carpets and curtains something hmrc don’t seem to understand, therefore the landlord has to provide them and should therefore be able to claim them as a deductible.
    As I understand laminate flooring might be regarded as a fixture and therefore claimable instead of carpet ?
    There is so much more legislation bullsh-t coming and already here that the Authorities will no doubt screw it all up. Take all this Licensing stuff or legionella rules, it goes on and on with no consideration for the landlord or whether the rules are absolutely necessary or not or impractical to carry out, just more and more pressure,thats why I starting to get out of the letting market.

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