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
- Carpets and flooring
- 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.“