Switching from wear&tear to renewals

[tallpaul]

I'm a LL seeking some advice following the recent chnage of tenant in my property.

I let out the property to my original tenant on a fully-furnished basis. This tenant then moved out & a few weeks later I let the property to a new tenant on a part-furnished basis.

Last tax year I claimed 10% wear & tear as the propoerty was fully furnished. Now I believe I'll need to switch to a renewals basis (?)

Do I need to notify the good folk of HMRC at this point in time, or does it all go in my tax return ?

For any repairs carried out during the void period, should these be covered under wear&tear or renewals ?

One final question (sorry for the long list), by way of example, if I replace a worn-out household appliance in December, then move back into the house in January, would the tax man take a dim view of my desire to offset this cost against income ? Note: I'm an overseas landlord who's renting out the family home for the moment - don't worry overseas part all sorted with HMRC.

Thanks.

[JK0]

Good questions. I think answers to both revolve around being strictly honest.

e.g. Regarding replacing appliance in Dec, and moving back in in January, you have to consider what proportions of the appliance's life was is in rental service, and in domestic service. You can only claim the proportion of the cost relevant to rental service. Does that make sense?

Similarly, when moving from wear & tear to renewals, you will have the benefit of replacement allowance on all items up to the point you change to renewals. Therefore, any items you replace in the first year of renewals basis, only have a few months at best of qualifying rental service to claim against.

Therefore for each item you replace under renewals, work out the proportion of its life it has been used under renewals basis, and multiply this proportion by the renewal cost. The result is what you can claim.

Repairs during voids: Repairs are still allowable under wear & tear.

e.g. You can still claim for a washing machine repair under wear & tear. You can't claim for replacing it though.

Suggest you attach a note to your tax return showing your workings for the above calculations.

Hope that helps.

[tallpaul]

Jamesknight. Thanks for the quick reply.

Reading your note, now I think about it, I realise I had an obvious misunderstanding on how renewals work. I'm piecing it together in my mind, but perhaps you could help little further by way of example...

Let's say on 5th October 2010 (so half way through the tax year) I purchase a tumble-drier to replace one that has expired at a cost of £250.

What could I offset against income in this & subsequent tax years ?

What if, through bad fortune &/or bad product choice, the new drier expires after a year & has to be replaced again ?

What about other appliances/fixtures/fittings in the house, not yet replaced, but aging over time, should these be considered also ?

Thanks, TP

[Telometer]

I think jamesknight0 doesn't understand (tax or much else), as he's made quite clear in several other places on this forum.

There's nothing in legislation or HMRC guidance to indicate what should happen (other than that you cannot "chop and change" between the two bases.)

If your washing machine expires in December, whilst the house is tenanted, you are compelled to replace it. It is therefore 100% tax deductible irrespective of what happens next.

If however you just fancy changing it, immediately prior to your moving in, then clearly it is not tax deductible.

How can anybody tell the difference? Remember you will be the one in court swearing to tell the truth, the whole truth and nothing but the truth.

But you certainly do not have to faff about with apportioning each and every spoon in the kitchen drawer. It's supposed to be a simplification basis...

[jeffrey]

If your washing machine expires in December, whilst the house is tenanted, you are compelled to replace it.
Maybe, maybe not. L must replace electrical goods only if:
a. they are part of the premises let (i.e. on the Inventory); and
b. there is an obligation to provide/maintain them.

[tallpaul]

Well, it is on the inventory & I do need to maintain it. Same applies to much of the contents

TP

[JK0]

I think jamesknight0 doesn't understand (tax or much else), as he's made quite clear in several other places on this forum.

There's nothing in legislation or HMRC guidance to indicate what should happen (other than that you cannot "chop and change" between the two bases.)

If your washing machine expires in December, whilst the house is tenanted, you are compelled to replace it. It is therefore 100% tax deductible irrespective of what happens next.

If however you just fancy changing it, immediately prior to your moving in, then clearly it is not tax deductible.

How can anybody tell the difference? Remember you will be the one in court swearing to tell the truth, the whole truth and nothing but the truth.

But you certainly do not have to faff about with apportioning each and every spoon in the kitchen drawer. It's supposed to be a simplification basis...

Why are you so rude to everyone?

Tallpaul, I am bowing out of this discussion. Telometer is obviously so more knowledgeable than I am, I will let him answer your questions.

[mind the gap]

Why are you so rude to everyone?

Tallpaul, I am bowing out of this discussion. Telometer is obviously so more knowledgeable than I am, I will let him answer your questions.

I do not see how Telometer's reply could be construed as 'rude' to anyone.

You are however correct about his more extensive knowledge and understanding.

[lord_cheeseman]

I've been told once you start W&T you cannot change to renewals and vise versa. However, if something integral to the property i.e. boiler, windows etc then the cost is deductible above the 10% W&T. If it's movable i.e. washing machine, sofa etc then it's not as it's covered by the 10% W&T, but you can deduct the cost of repairs.

[tallpaul]

Well, wear&tear allowance is only available on fully furnished properties. So if you let fully furnished you can claim it. However, if your next tenant wants unfurnished, I do not believe you can claim it then & simply have to switch.

What's the alternative ?