As the RLA has previously reported the tax concession allowing landlords of unfurnished properties to claim for the replacement of white goods, carpets and curtains in unfurnished property was withdrawn by HMRC with effect from April 2013.
HMRC have indicated they will review the impact of the change. In order to monitor how these changes are impacting in Landlords the RLA conducted a survey with the Chartered Institute of Taxation (CIOT) and ICAEW to find out if landlords were generally aware of the change in the tax rules its impact on the frequency Landlords change white goods and carpets. It also asked if landlords would change from unfurnished lets to fully furnished or totally unfurnished as a consequence.
There were 628 responses and of these over 75% were not aware of the change in the tax rules. The majority of landlords provide white goods (74%), carpets (98%) and curtains (79%) in their unfurnished rental properties and just over half said the lack of tax relief would change the frequency the items were replaced while 63% will either stop providing such furnishings or become fully furnished.
Those landlords who change to fully furnished lets will then be eligible for the wear and tear allowance calculated as 10% of rents received. With interest rates stuck firmly in the gutter, people are looking elsewhere for opportunities to invest their savings. One particular opportunity is the buy-to-let market, you or if you have the funds available you buy a property and then get an income from the rent. With property prices still rising, it's a technique that offers a degree of security whilst offering decent returns on your investment. However, its not without its pitfalls. The following link offers answers to questions such as Is Direct Line Landlord Insurance OK For Buy To Let Property.CIOT and ICAEW have written writing to HMRC, using the RLA survey results, highlighting that this will inevitably increase the cost to the exchequer compared to allowing renewals for unfurnished lets and that the tax change should be reversed.
You can read the RLA's full guide to tax relief on furniture here