Renewals basis for unfurnished rental properties – private landlords could be in a for a shock when claiming for replacement white goods.
This is old news, but it is now becoming relevant as people are completing their 2013/2014 tax returns.
In the past, landlords of unfurnished properties were able to claim the cost of standalone white goods such as fridges against tax on the basis they were replacement goods. This was in fact a concession that was allowed rather than a right. Furnished properties on the other hand, continue to attract a 10% deduction as wear and tear allowances.
There has been a lot of comment about this and indeed the Institute of Chartered Accountants has written to HMRC complaining about the change, but they are adamant that such expenditure does not qualify for relief against income tax. Having said this, this is only the case if the goods are standalone; whereas if they are integral to a fitted kitchen, then the replacement can be claimed as a repair.
This does not really make much sense to anyone but it is unfortunately the law. The problem is, that a lot of landlords who possibly complete their own tax returns are not aware of the change and may be caught out after their tax returns have been submitted and this may be a reason for HMRC to ask more questions about their returns.
You can look at more detailed guidance from HMRC at the following website http://www.hmrc.gov.uk/worksheets/sa105-notes.pdf .