Home 5 Income Tax 5 Eligibility for replacement of domestic items relief
Eligibility for domestic items relief

Eligibility for replacement of domestic items relief

14 March 2024

The replacement of domestic items relief enables landlords to claim tax relief when they replace movable furniture, furnishings, household appliances and kitchenware in a rental property.

Replacement of Domestic Items Relief

Landlords can claim tax relief when they replace movable furniture, furnishings, household appliances, and kitchenware in a rental property, thanks to the replacement of domestic items relief. Consequently, the cost of domestic items such as free-standing wardrobes, curtains, carpets, televisions, fridges, and crockery determines the available allowance.

Conditions for Qualifying for Relief

Four conditions must be met to qualify for relief:

Condition A – The individual or company claiming the relief must operate a property business that includes letting a dwelling-house.

Condition B – Initially, the landlord must replace an old domestic item provided for use in the dwelling-house. Subsequently, they must replace it with the purchase of a new domestic item. Following this, the landlord must provide the new item for the lessee’s exclusive use in that dwelling-house. As a result, the lessee must no longer have access to the old item.

Condition C – The expenditure on the new item must not violate the wholly and exclusive rule but would otherwise violate the capital expenditure rule.

Condition D – The landlord must not have claimed Capital Allowances for the expenditure on the new domestic item.

If all four conditions are met, the landlord can claim a deduction for the expenditure on the new item.

The amount of the deduction is based on:

  • the cost of the new replacement item, limited to the cost of an equivalent item if it represents an improvement on the old item (beyond the reasonable modern equivalent);
  • the incidental costs of disposing of the old item or acquiring the replacement; and less
  • any amounts received on disposal of the old item.

HMRC’s internal guidance provides an example highlighting that a brand new budget washing machine costing circa £200 is not an improvement if a replacement for a five year old washing machine that cost around £200 at the time of purchase (or slightly less, taking into account inflation).

Source: HM Revenue & Customs Tue, 12 Mar 2024 00:00:00 +0100

You may also like these

Here are some more articles that might interest you

Expert Advice

If you’d like more information on anything you’ve read, we’re here and happy to help