Wear and Tear Allowance — What Replaced It and How It Works

If you've been a landlord for any length of time, you probably remember the wear and tear allowance. It was one of those reliefs that felt almost too good to be true — you could claim ten per cent of your net rental income as a deduction for furnishings, whether or not you'd actually spent anything on replacing them. Well, HMRC eventually agreed it was a bit too generous, and in April 2016 they scrapped it entirely.

In its place came the Replacement of Domestic Items Relief. It's a different beast altogether, and understanding how it works is important if you want to claim everything you're entitled to without falling foul of the rules.

A Quick History — The Old Wear and Tear Allowance

Before April 2016, landlords who let furnished residential properties could claim a flat-rate deduction of ten per cent of net rent (that's gross rent minus any charges you paid that a tenant would normally pay, such as council tax or water rates). This was the wear and tear allowance, and it was available regardless of whether you actually replaced any furnishings during the year.

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The logic was simple: furnishings deteriorate over time, and landlords need to replace them eventually. Rather than tracking every kettle, curtain, and bed frame, HMRC offered a blanket deduction. Many landlords loved it because it was easy to calculate and often gave a bigger deduction than they'd actually spent.

The problem, from HMRC's perspective, was exactly that. Landlords were claiming deductions for replacements they weren't making. A landlord could claim the ten per cent year after year without ever replacing so much as a bath towel. That didn't sit well with a government trying to close tax loopholes and raise revenue.

So, from 6 April 2016, the wear and tear allowance was abolished for income tax purposes. In came the Replacement of Domestic Items Relief — a system based on what you actually spend.

How the Replacement of Domestic Items Relief Works

The replacement relief is more targeted than its predecessor. Instead of a percentage-based deduction, you can now claim the cost of replacing domestic items — but only when you actually replace them.

Here's the key principle: you can claim the cost of a new domestic item that replaces an old one, provided the replacement is like-for-like or broadly equivalent. If you upgrade to something substantially better, you can only claim the cost of a like-for-like replacement, not the full cost of the upgrade.

For example, if you replace a basic washing machine that cost £250 with a premium model costing £600, you can only claim the cost of a comparable basic replacement — say, £250 to £300. You can't claim the full £600 because the upgrade element isn't covered.

The relief applies to:

• Moveable furniture (beds, sofas, tables, chairs, wardrobes)
• Furnishings (curtains, blinds, carpets, rugs)
• Household appliances (washing machines, dishwashers, fridges, cookers)
• Kitchenware (crockery, cutlery, pots and pans)
• Other items provided for the tenant's use (TVs, lamps, garden furniture)

Importantly, it does not cover:

• Items that are fixtures and fittings integral to the building (fitted kitchens, fitted bathrooms, boilers, radiators). These are dealt with under different rules — typically as repairs or capital improvements.
• The initial furnishing of a property. You can only claim for replacements, not for the first time you furnish a let property.

That last point catches a lot of landlords out. If you buy a property, furnish it from scratch, and let it out, those initial furnishing costs are capital expenditure. You can't deduct them from your rental income. It's only when you later replace those items that the replacement relief kicks in.

Furnished, Part-Furnished, and Unfurnished — Does It Matter?

Under the old wear and tear allowance, only fully furnished properties qualified. Part-furnished and unfurnished lets were excluded, which created some odd incentive structures.

The good news is that the replacement relief is available to all residential landlords, regardless of the level of furnishing. Whether your property is fully furnished, part-furnished, or unfurnished, if you replace a domestic item, you can claim the relief.

Even unfurnished properties typically contain some domestic items — carpets, curtains, a cooker, perhaps white goods. When these need replacing, the cost qualifies for the relief.

This is actually an improvement over the old system for landlords of part-furnished and unfurnished properties, who previously had no access to the wear and tear allowance at all.

What Counts as a Replacement?

To claim the relief, there must be an old item being replaced by a new one. It sounds obvious, but it's worth being precise about.

If a washing machine breaks down and you buy a new one, that's a replacement. If you install a dishwasher in a property that never had one before, that's a new provision — not a replacement — and it doesn't qualify.

The replacement doesn't have to be on a one-for-one basis in terms of the exact same item. You could replace a freestanding cooker with a different freestanding cooker, or even replace curtains with blinds. What matters is that there was an existing domestic item serving a particular function, and you've replaced it with something serving the same function.

HMRC also allows you to claim the incidental costs of disposing of the old item and installing the new one. So if you pay someone to remove the old sofa and deliver the new one, those delivery and disposal costs are part of the claim.

Keeping track of all these replacements throughout the year is where good record-keeping comes in. Accounted makes it straightforward to log each purchase against the right property and category, so you have a clear trail when it's time to complete your tax return. Penny can even help you categorise items correctly as you go, flagging anything that might need a second look.

Practical Examples

Let's run through a few scenarios to make this concrete.

Scenario 1: Like-for-like replacement You replace a five-year-old double bed with a new double bed of similar quality. The new bed costs £350. You can claim the full £350 as a deduction against your rental income.

Scenario 2: Upgrade You replace a basic fridge-freezer (equivalent new cost: £200) with a top-of-the-range model costing £500. You can claim £200 — the cost of a comparable replacement — not the full £500.

Scenario 3: Initial furnishing You buy a buy-to-let property and furnish it from scratch, spending £3,000 on furniture and appliances. None of this qualifies for the replacement relief. It's capital expenditure.

Scenario 4: Replacing carpets The carpets in your rental property are worn out, and you replace them with new carpets of similar quality. This qualifies. The full cost of the new carpets (including fitting) can be claimed.

Scenario 5: Carpets to hard flooring You replace worn carpets with engineered wood flooring. This is trickier. If the wood flooring is broadly equivalent in cost to replacing the carpets, you should be fine. If it's significantly more expensive, you may only be able to claim the cost of equivalent replacement carpets.

How to Claim the Relief

You claim the Replacement of Domestic Items Relief on your Self Assessment tax return, within the property income section. If you use software like Accounted to manage your property finances, it can help you pull together the figures you need.

For each claim, you should keep:

• A receipt or invoice for the new item
• Evidence of the old item being replaced (a photo, a note in your records, or even a text to the tenant confirming collection of the old item)
• If you're claiming for a like-for-like amount on an upgrade, evidence of what a comparable replacement would have cost

HMRC can ask to see this evidence, so keeping proper records is essential. It doesn't need to be complicated — a photo of the receipt stored digitally and a note in your bookkeeping records is usually sufficient.

If you're tracking expenses across multiple properties, it's important to allocate each replacement to the correct property. This is especially relevant if you have a mix of jointly owned and solely owned properties, or if some properties are let through a partnership arrangement.

You can find more detail on claimable expenses in our guide to what expenses landlords can claim, which covers the replacement relief alongside other common deductions.

Common Mistakes to Avoid

A few pitfalls trip landlords up regularly:

• Claiming for initial furnishing. As mentioned, the first time you furnish a property doesn't count. Only replacements qualify.
• Forgetting to adjust for upgrades. If you upgrade, you need to work out the like-for-like cost and claim only that amount.
• Confusing domestic items with fixtures. A freestanding cooker is a domestic item. A built-in oven is a fixture. The tax treatment is different. Fixtures are usually treated as part of the property itself, and their replacement may count as a repair (fully deductible) or a capital improvement (not immediately deductible).
• Not keeping receipts. Without evidence, you can't make the claim. It's that simple.
• Claiming for items in properties you don't let out. The relief is only available for items in residential let properties. If you use a property yourself for part of the year, you'll need to apportion accordingly.

Planning Ahead

Even though the replacement relief is based on actual expenditure, there's still room for sensible planning. If you know several items in a property are nearing the end of their useful life, you might choose to spread replacements across tax years rather than doing everything at once. This can help smooth out your tax deductions and make your cash flow more predictable.

It's also worth considering the timing of replacements relative to void periods. If a property is between tenants, that's often a convenient time to replace worn items — and the cost still qualifies for the relief even if there's no tenant in situ at the time, provided the property is being let or available for letting.

For landlords managing several properties, a schedule of furnishing ages and likely replacement dates can be genuinely useful. It takes a bit of effort to set up, but it helps with budgeting and ensures you don't miss out on legitimate deductions. You can read more about managing property costs in our guide to landlord allowable expenses.

Related reading:

• What Expenses Can Landlords Claim
• Landlord Allowable Expenses
• Furnished Holiday Lettings Guide

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