Replacement of domestic items and fixtures in residential properties

Produced by Tolley
Replacement of domestic items and fixtures in residential properties

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Replacement of domestic items and fixtures in residential properties
  • Introduction
  • Summary of available reliefs for residential property businesses
  • Replacement of domestic items relief (2016/17 onwards)
  • Meaning of ‘domestic item’
  • Amount of the deduction
  • Replacement of fixtures (2013/14 onwards)

Introduction

The distinction between revenue and capital expenditure is an important one for property businesses. This is because revenue expenditure is allowable, provided it is incurred wholly and exclusively for the purposes of the property business. See the Allowable property expenses guidance note. Capital expenditure is usually disallowed, although capital expenditure incurred in relation to a commercial property may qualify for capital allowances. See the Capital allowances ― overview guidance note.

However, from 2017/18 onwards, the revenue / capital divide is reformed if the profit or loss of the property business is calculated using the simplified cash basis. Under those rules, which apply automatically unless certain conditions are met (eg profits of over £150,000 in the year, or the business owner elects for the accruals basis to apply instead), all expenditure is an allowable deduction unless it falls into an excluded category. See the Simplified cash basis for unincorporated property businesses guidance note.

Where the property business includes residential property, additional specific reliefs may be available, irrespective of the basis of assessment used to calculate the profits and losses. These are discussed in this guidance note.

Summary of available reliefs for residential property businesses

The reliefs surrounding revenue deductions for capital expenditure in respect of residential property businesses have changed significantly over time and it can be difficult to keep track of what was in force for which year. In summary:

Relief2010/11 and prior years2011/12 to 2012/132013/14 to 2015/162016/17 onwards
Replacement of domestic items relief (ITTOIA 2005, s 311A)

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