The government has confirmed, as already announced at the Summer Budget 2015, that wear and tear allowance and renewals allowance for property businesses is to be repealed with effect from April 2016.

In its place, the government is introducing a new relief (also with effect from April 2016) that will allow landlords of residential properties to deduct the costs they incur in replacing furnishings, domestic appliances, kitchenware, etc. that have been provided for the use of their tenants in those properties. Broadly, the relief available on the replacement item will be limited to the cost of an equivalent item, however, it will allow for the deduction of incidental costs incurred in acquiring the replacement item/disposing of the old item less any proceeds received for the disposal of the old item.

The government’s policy objective behind this measure is to give relief for the cost of replacing furnishings to a wider range of property businesses and to provide for a more consistent and fairer way of calculating taxable profits.”