10% wear and tear loss affect on furnished?

Just for easy reference:

The proposals
2.1 The Government has announced that from April 2016 the Wear and Tear Allowance will be replaced witha relief that enables all landlords of residential dwelling houses to deduct the costs they actually incur on replacing furnishings
in the property. This will give relief for capital expenditure to a wider range of
property businesses as well as a more consistent and fairer way of calculating
taxable profits.

2.2
The proposals will give greater consistency and fairness across the residential
property letting sector and reduce the number of tax rules applying to the
residential property sector. The proposals will apply from 6 April 2016 for
income tax purposes and 1 April 2016 for corporation tax purposes.Scope of the new
replacement furniture relief

2.3
The relief will apply to landlords of unfurnished, part furnished and furnished
properties. The relief will not apply to ‘furnished holiday letting’ businesses (FHLs)
and letting of commercial properties, because these businesses receive relief through the Capital Allowances regime.

2.4The new replacement furniture relief will only apply to the replacement of
furnishings. The initial cost of furnishing a property would not be included.

Reply to the comment left by "Neil Patterson" at "04/08/2015 - 08:48":

Hi Neil

Thanks for that. It does seem to me that there is no 'fairness' in the arrangement and the new rules take away the only reason one would ever rent out furnished rather than unfurnished. Personally I'll just convert over time to unfurnished rentals and it won't impact overly. This is what I expect a lot of landlords will also do. I don't see it bothering many landlords but I do think there will impact badly on young people coming to London and other places with a dynamic economy.

Reply to the comment left by "Jamie Finch" at "04/08/2015 - 09:42":

Hello Jamie,

You will still be able to claim on a renewals basis but I agree, landlords will stop providing furnished lets.

There will still be a demand for them but with less landlord supply, I think it will become possible to charge higher rents for furnished. Maybe even ten percent!

One big sector whacked by this will be student lets and will inevitably lead to higher student rents.

What are the transitional arrangements for those who have furnished recently and haven't even received the first year's W&T Allowance and will not therefore receive a second or subsequent?

White goods for us(most?) is largely a red herring as the only non-integrated appliance are the washer driers and were thus already eligible for a full in year replacement claim.

I actually support the move and it greatly simplifies tax calculations.

Reply to the comment left by "money manager" at "04/08/2015 - 11:53":

There is no mention of any transitional arrangements:

"The proposals will apply from 6 April 2016 for income tax purposes and 1 April 2016 for corporation tax purposes."

If I rented out a fully furnished flat last month prior to budget am I able to claim my 10% wear and tear April 6th for tax yr 15/16?
I spent a lot of money furnishing the flat.

So if I don't renew I can't Claim?

What about other tenants that insist I renew as they signed a fully furnished flat agreement two years ago??

Reply to the comment left by "AA Properties Wales " at "04/08/2015 - 12:44":

It is from April 2016 so you should be ok in the 2015/16 tax year.

However please only act upon advice from a qualified and insured accountant or HMRC.

I agree with Monty Bodkin. As posted in another thread:

1) Will Landlord's reduce supply of furnished accommodation? YES (according to 99% of 118 contributors).
2) Will some Tenant's still demand furnished accommodation? YES.
3) Assuming there is no glut of furnished accommodation waiting to get "used up", market forces WILL open up the differential between furnished and unfurnished.

The new system with regard to Wear & Tear is fair and logical. The current system with its arbitrary 10% is neither.

There will be no overnight change - anyone with existing furnished properties will continue to rent furnished as they have already incurred the expense. They may find that they will continue to do so, as pieces of furniture are generally replaced incrementally and the whole cost will be deductible from profits.

Anyone considering buying new furniture will prefer to wait until after 6 April and deduct the whole amount from their 2016-17 profits.

In the houseshare market there is *strong* demand for furnished property: how many young people - working or students - want to lug beds, wardrobes, TVs and so on around with them, and find a place to store it all when they take time out to go travelling or live in student halls? I don't expect many landlords running HMOs are going to stop providing furnished accommodation - it's simply too popular. It may not earn much of a premium on the rent, but it certainly improves demand and reduces void levels.

I can also see certain landlords using the new rules as an opportunity to upgrade their personal home furnishings: buying a new sofa, say, ostensibly for a rental property, then deducting the whole cost from their rental receipts, then deciding after a suitable period that the tenants can live with the landlord's cast-offs and quietly swapping them over.

Ditto curtains: perhaps they needed replacing in the rented house, but the landlord's choice didn't go down well with the tenants, so she used something else - and fortunately the curtains worked just perfectly in her own house.

Of course I'm not encouraging such practices, but I can't see anything in the regulations that says these 100% deductible furnishings must be used in a specific, demonstrable rented property, or over any particular timeframe. Wear and tear by tenants is a highly moveable feast.