Land and Property Return - Wear and Tear

[Worldlife]

For about 5 years we have claimed 10% of the rent against wear and tear under 5.37 of the Land and Property Return.

This year we had to make a County Court claim for £1521.22 for damages caused by the tenant and it was clearly agreed in Court that the damages were beyond fair wear and tear and that the claim for compensation was reasonable.

Due to a fault in documentation we were only able to secure part of this damages payment.

Can I claim the 10% fair wear and tear this year and add the damages that were not fair wear and tear to the 5.25 "repairs, maintenance, and renewals"

[Tax Accountant]

For about 5 years we have claimed 10% of the rent against wear and tear under 5.37 of the Land and Property Return.

This year we had to make a County Court claim for £1521.22 for damages caused by the tenant and it was clearly agreed in Court that the damages were beyond fair wear and tear and that the claim for compensation was reasonable.

Due to a fault in documentation we were only able to secure part of this damages payment.

Can I claim the 10% fair wear and tear this year and add the damages that were not fair wear and tear to the 5.25 "repairs, maintenance, and renewals"

Presumably the damages were to furnishings in respect of which you were claiming the 10% wear and tear allowance.

Even if these furnishings were destroyed without any recovery of compensation, you would not receive any allowance for this as you are already claiming the wear and tear allowance.

Therefore, the answer has to be that no deduction is allowed in respect of any of your losses, whether recovered by compensation or not. On the same point, there will be no deduction allowed for any replacement furnishings bought.

You need to be sure that you are aware what items come under furnishings and what items are fittings. Sometimes the distinction is blurred and confusing.

Ramnik

[Worldlife]

Thanks for your guidance Ramnik!

My Irish logic is obviously wrong :)

My thoughts were that the 10% allowance was for fair wear and tear and would enable replacement of fittings and furnishings over a ten year period but I clearly accept the validity of your point that within that framework some items might require replacement before the ten year period.

If I recall correctly I believe you have the choice between claiming the 10% allowance or detailing individual expenses. Maybe I could opt this year for the detailed costing rather than 10% flat rate.

The Judge at our hearing accepted the inventory description of the condition of contents and did not take into account age. His view was that even although some furnishings were old (quality reproduction items) it did not render them valueless and it was fair to cost for equivalent secondhand replacements or specialist repairs (e.g cutting a new marble table top to a solid brass table base)

A landlord could have a property with an expensive rent but low quality furnishings and would profit from a 10% allowance or a property with a relative cheap rent and expensive contents (say a previous family home) where the 10% allowance might be less adequate. Each landlord has the option of choosing the best method of claim to suit the circumstances.

Well it was worth a try :)

[Tax Accountant]

You should read HM Revenue & Custom's Property Income Manual PIM 3200 at www.hmrc.gov.uk/manuals/pimmanual.

As you say, a landlord has the choice whether to claim the wear & tear allowance or the renewals allowance. But, whatever basis is chosen, it must be followed consistently. It isn't possible to chop and change between the two from year to year.

Remember that when you choose to take the 10% wear and tear allowance, you cannot later claim for the cost of replacing the furnishings. However, you can claim the cost of repairing them.

You can also deduct the cost of renewing or repairing fixtures which are an integral part of the buildings. Fixtures integral to the building are those which are not normally removed by either tenant or owner if the property is vacated or sold, eg, baths, washbasins, toilets, central heating installations etc. Expenditure on renewing such items is normally a revenue repair to the building. It is due even though the 10% wear and tear allowance has been deducted.

Ramnik