UK BTL replacement furniture relief.
Tax saving
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Allowable deduction
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The relief that replaced wear and tear
Until April 2016 landlords letting furnished property could claim a flat wear and tear allowance worth 10% of net rent, whether or not they spent a penny on furniture. HMRC scrapped it and put Replacement of Domestic Items Relief in its place. The new relief is narrower and more demanding. It gives a deduction against rental income only for the cost of replacing a domestic item that was already provided, such as a sofa, bed, fridge, carpet, or curtains. It gives nothing for the first time you furnish a property, and nothing for the part of any replacement that is an upgrade rather than a like for like swap. This calculator works out the allowable deduction and the tax it saves you, and the inputs are arranged to enforce those two restrictions.
Replacing a £1,500 sofa, like for like
Say you replace a worn out sofa with an equivalent new one costing £1,500, you scrap the old one for nothing, and there is no upgrade element because the new sofa is broadly the same as the old. As a higher rate taxpayer on 40%, the full £1,500 is allowable and it saves you £600 in tax.
| Step | Amount |
|---|---|
| Cost of the replacement item | £1,500 |
| Less improvement element | £0 |
| Less proceeds from selling the old item | £0 |
| Allowable deduction | £1,500 |
| Tax saving at 40% | £600 |
Now change one thing. Suppose you trade up to a £2,500 leather sofa. HMRC treats only the cost of an equivalent basic replacement, say £1,500, as allowable, and the £1,000 improvement element is disallowed. The deduction falls back to £1,500 and the saving stays £600 despite spending £1,000 more. The chart shows how the improvement element is stripped out before the deduction is set.
Improvement, disposal, and the traps in between
Two adjustments shrink the deduction. The first is the improvement element, the cost above a reasonable like for like replacement, which is never allowable. A simple modern equivalent is fine, so swapping an old non condensing washing machine for a current standard one is not an improvement even if it is more efficient. The second is any money you get for the old item, which is netted off. There is also a distinction landlords miss between replacing a free standing item, which qualifies, and replacing something that is a fixture forming part of the building, such as a fitted kitchen unit or a boiler, which is usually treated as a repair to the property and claimed differently. This tool is for buy to let landlords sizing the deduction on a specific replacement before they file, and for checking that they are not wrongly claiming an upgrade.
What counts as a domestic item
The relief uses a specific list, and knowing what qualifies stops you from either missing a deduction or claiming one HMRC will reject. Domestic items that qualify on replacement include free standing furniture such as beds, sofas, wardrobes, and tables, furnishings like carpets, curtains, and linen, white goods such as fridges, freezers, washing machines, and dishwashers, and crockery and cutlery. What does not qualify under this relief is anything that is a fixture, meaning something attached to the building and not easily removed, because those are part of the property itself. So replacing a free standing cooker is a domestic item, but replacing a fitted oven built into a fitted kitchen is usually a repair to the property, claimed as an ordinary expense instead. The distinction sounds pedantic, but it determines which box the cost goes in on your return, and getting it wrong is a common reason a deduction is challenged.
Quick answers
Can I claim for furnishing a property I have just bought to let?
No. The relief is strictly for replacing an item already in use in the let. The initial cost of furnishing a property for the first time gets no deduction under this relief at all. You only start claiming once you replace those original items later in the life of the tenancy.
Does the relief apply to a property let under the Rent a Room scheme?
No. Replacement of Domestic Items Relief is for separately let residential property. If you are letting a room in your own home and using the Rent a Room scheme, you are taking the £7,500 tax-free allowance instead and cannot also deduct replacement furniture costs. The two are mutually exclusive for the same income.
A practical habit worth forming: keep the receipt for both the old item and its replacement, and a short note on why the new one is equivalent rather than an upgrade. HMRC's test for the improvement element is qualitative, and a one line record made at the time, for instance that you replaced a fabric three seater with another fabric three seater, is exactly the evidence that settles an enquiry quickly.