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HMRC internal manual

Property Income Manual

Furnished lettings: wear & tear allowance: 2010-11 and earlier


This guidance applies to years up to and including 2010-11 for income tax payers and for accounting periods commencing before 1 April 2011 for corporation tax payers. For later periods see PIM3205 onwards.

Where a taxpayer lets a residential property furnished, plant and machinery capital allowances cannot be claimed on furniture, furnishings or fixtures within the property. Instead under ESC B47 a deduction could be claimed for a wear and tear allowance of 10% of the ‘net rent’ from the furnished letting.

If the accommodation was unfurnished, or only partly furnished, the 10% wear and tear allowance was not available, nor were capital allowances.

As a result the 10% wear and tear allowance was only available if the furnished property was one that was capable of normal occupation without the tenant having to provide their own beds, chairs, tables, sofas and other furnishings, cooker etc.

The wear and tear allowance was based on the ‘net rent’. The net rent was:

  • The receipts from furnished residential lettings (rent plus chargeable amount of any lease premium or reverse premium received, see PIM1200 onwards) included in arriving at the profits for the period LESS

  • Any expenses that would normally be borne by the tenant (for example, council tax, rates, utilities etc).

The 10% was calculated only on the net rent from the furnished lettings, any rent from other unfurnished lettings was excluded.

The 10% wear and tear allowance did not cover those fixtures that were an integral part of the buildings. For example, baths, washbasins, toilets, central heating installations. Expenditure on renewing such items would normally be an allowable expense as a repair to the building, subject to where it amounted to an improvement. For guidance on renewing these fixtures see the Business Income Manual.

ESC B47 also offered an alternative approach to the 10% wear and tear allowance, this was the non statutory renewals basis (set out in PIM3230), which gave relief for the net cost of replacing a particular item of furniture etc, for guidance on this ‘renewals allowance’ see the Business Income Manual.

If a taxpayer had chosen to take the 10% wear and tear allowance then they could not later decide to claim for the cost of replacing the assets.