Back in April 2013, HMRC removed a tax concession that allowed landlords to claim wear and tear tax relief when they replaced white goods, curtains and carpets. However, according to research carried out by the Residential Landlords Association, 75 per cent of landlords are blissfully unaware of this important change in the tax rules.
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RLA Surveys Landlords 678 landlords responded to the RLA survey, which was carried out in conjunction with the Chartered Institute of Taxation and ICAEW. Three quarters of them said they supplied white goods, nearly all supplied carpets, and most had curtains in their unfurnished properties. After being made aware of the loss of tax relief, just over 50 per cent of the landlords quizzed said they would either turn their properties into fully furnished ones, or remove everything, including carpets and curtains as a consequence.
Wear and Tear Tax Allowance Landlords who decide to switch over to letting fully furnished properties are then eligible for the 10 per cent wear and tear tax concession on their properties, which allows them to claim tax relief on rents received.
CIOT Recommends Tax Relief Restored As a result of the survey results, the CIOT and ICAEW have written to HMRC expressing concern that the prospect of landlords changing their properties over from unfurnished to furnished – and raising rents to pay for the extra cost – will cost the exchequer in the long run. They recommend that HMRC reverses the change and restores the wear and tear tax concession to landlords. Whether or not HMRC listens remains to be seen.