The renewals basis which allowed for tax relief on white goods, furniture and soft furnishings for residential let property has been withdrawn from 6 April 2013 for income tax and 1 April 2013 for corporation tax.

This relief was one of the extra statutory concessions that have been available for some time but HMRC are now withdrawing these concessions.

The withdrawal of the renewals basis concession is causing some concern to tax advisers and tax payers but we have detailed below what we believe will be the affect of the withdrawal of this concession.

This will not affect furnished residential let property where the wear and tear allowance (10% statutory allowance) is available as detailed in our online article tax-relief-on-wear-and-tear-of-furniture-let-property for fully furnished lettings.

However the withdrawal of the renewal basis will affect unfurnished residential lettings. Capital allowances are not allowable against income from unfurnished residential lettings. Therefore the costs of replacing any free standing equipment (such as a fridge freezer) in an unfurnished residential property will not be deductible as an expense.

Where white goods are fitted such as integrated hobs and ovens then these will be recognised as part of the entirety of the property and so would be deductible as a repair when replaced.

Small items such crockery, rugs i.e. low cost furnishings would be tax deductible from income from unfurnished residential lettings.

For full details on HMRC updated guidance on repairs concerning furnished, part furnished and unfurnished lettings see HMRC - Property businesses deductions - repairs and renewals.

Please contact us for further advice tax implications of income from let properties.