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TODAY'S OTHER NEWS

Half of landlords affected by removal of wear and tear allowance

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.

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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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    Of course landlords of furnished properties should not have an automatic 10% wear and tear allowance which does not reflect any specific expenses they've made. They are in the privileged of owning second (and often more) homes. This is a tax perk which past labour and conservative governments should have got rid of years ago. This is a good and progressive tax change. (Of course landlords will not welcome it, but those with the broadest shoulders should bear the greatest burden.)

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