PIM3210 - Furnished lettings: Replacement of domestic items relief: 2016-17 onwards


This legislation applies to expenditure incurred on or after 6 April 2016 for income tax purposes and 1 April 2016 for corporation tax payers.

Broadly, it allows a deduction for the replacement (not initial purchase) of certain domestic items.

Conditions for relief

In order for relief to be given, 4 conditions must be met:

Condition A – the individual or company looking to claim the relief must carry on a property business that includes the letting of a dwelling-house(s).

Condition B – an old domestic item that has been provided for use in the dwelling-house is replaced with the purchase of a new domestic item. The new item must be provided for the exclusive use of the lessee in that dwelling-house and the old item must no longer be available for use by the lessee.

Condition C – The expenditure on the new item must not prohibited by the wholly and exclusive rule (see BIM37000) but would otherwise be prohibited by the capital expenditure rule (see BIM35000).

Condition D – Capital Allowances must not have been claimed in respect of the expenditure on the new domestic item.

If the 4 conditions are met, then a deduction for the expenditure on the new item can be claimed.

However, a deduction is not allowed if:

  • The dwelling-house in question is, in full or part, a furnished holiday letting
  • Rent-a-Room receipts have been received in respect of the dwelling-house in question and Rent-a-Room relief has been claimed in relation to those receipts.

Calculation of the deduction

If the new item is of broadly the same quality/standard as the old item and doesn’t represent an improvement then the deduction is the cost of the new item. Note that for these purposes, just because an item is brand new does not make it an improvement over an item which has been in use for several years and suffered general wear and tear. For example, a brand new budget washing machine costing circa £200 is not an improvement over a 5 year old washing machine that cost around £200 at the time of purchase (or slightly less, taking into account inflation).

However, where the new item is not substantially of the same standard/quality as the old item, the deduction is equal to the lesser of:

  • the cost of the new item


  • the cost that would have been incurred if the old item had essentially been replaced like-for-like.

Incidental Capital Expenditure

If incidental capital expenditure is incurred in connection with the disposal of the old item or the purchase of the new item, the deduction is increased by the amount of that incidental expenditure. An example of incidental capital expenditure might be: the costs of delivery of an oven, the cost of installation of that oven, and the cost of disposing of the old oven.

Consideration received for old item

Where the old item is disposed of for consideration in money or money’s worth (see 3 TC 158 Tennant v Smith), the amount received is deducted from the expenditure on the new asset to get to the amount of the deduction for tax. E.g. a landlord replaces the sofa in their let property. They sell the old sofa for £100 and then buy a new sofa, of equivalent quality/standard, for £600. The amount of the deduction for replacement domestic items would be £500.


Where the old item is traded in as part exchange for a new item, the deduction is equal to the amount expended in excess of the trade in value received. For example, a landlord buys a new fridge costing £800. They trade in the old fridge which is given a value of £300 and meet the rest of the cost with £500 of cash. The amount of the deduction for replacement domestic items would be £500. No deduction is given for the trade in value of the old item.

What is a domestic item?

A domestic item is an item for domestic use such as:

  • Moveable furniture (sofas, tables, bed frames etc)
  • Furnishings (curtains, rugs, carpets etc)
  • Household appliances (fridges, freezers, washing machines etc)
  • Kitchenware (utensils, crockery, cutlery etc)

This list is not intended to be complete but gives an idea of the assets that are domestic items and would qualify for ‘Replacement of Domestic Items Relief’.

However, fixtures are not domestic items and do not qualify for ‘Replacement of Domestic Items Relief’. Fixtures are:

  • Any plant or machinery that is installed or fixed in or to a dwelling-house such that it becomes part of that dwelling-house
  • Any boiler or water-filled radiator installed in a dwelling-house as part of a space or water heating system

If you need to consider the meaning of ‘plant’ or ‘machinery’ please consult CA21000.

Examples of fixtures:

  • Baths
  • Washbasins
  • Toilets
  • Fitted furniture that has become part of the dwelling-house (e.g. built in wardrobe and cupboards)

This list is not intended to be complete but gives an idea of the assets that are fixtures and would not qualify for ‘Replacement of Domestic Items Relief’.

As these items are fixtures of the building, the cost of replacing these may be an allowable expense as a repair to the building. However, expenditure will not be on repairs if an ‘entirety’ is replaced. Guidance on when replacing an item is a repair to a larger entirety can be found in the Business Income Manual at BIM46900 onwards