If you let out the residential property (a dwelling house) you may be able to claim a deduction for the cost of replacing domestic items such as:

  • Movable furniture for example beds, free-standing wardrobes
  • Furnishings for example curtains, linens, carpets, floor coverings
  • Household appliances for example televisions, fridges, freezers
  • Kitchenware for example crockery, cutlery

Replacement of domestic items relief is only available for expenses incurred from 6 April 2016 for Income Tax purposes.

You can claim this relief when:

  • You carry on a property business that includes the letting of a dwelling-houses
  • An old domestic item provided for use in the dwelling-house is replaced with the purchase of a new domestic item and:
    1. It’s provided for the exclusive use of the lessee in that dwelling-house
    2. The old item must no longer be available for use by the lessee
  • The expenditure on the new item must not be prohibited by the wholly and exclusive rule but would otherwise be prohibited by the capital expenditure rule
  • Capital allowances must not have been claimed for the expenditure on the new domestic item

You cannot claim this relief:

  • If you replace a domestic item in a property that qualifies as a Furnished Holiday Let – you will continue to be able to claim capital allowances on these items
  • If you use the Rent a Room Scheme
  • For the initial cost of buying domestic items for a dwelling house

Replacement of domestic items relief can be claimed for dwelling houses that are:

  • Unfurnished
  • Part furnished.
  • Fully furnished.

When the new item is an improvement on the old asset

If the new item is an improvement on the old item, for example replacing a sofa with a sofa bed, you can only claim a deduction for the cost of buying an item the same as the original. For example, if a new sofa costs £400 but a sofa bed costs £550, you can only claim the £400 as a deduction and no relief is available for the £150.

A new item is an improvement when:

  • It’s not the same or substantially the same as the old item.
  • The functionality has changed (for example from a sofa to a sofa bed)
  • You upgrade the quality or material of the item (for example you upgrade from synthetic fabric carpets to woolen carpets)

If the replacement item is a reasonable modern equivalent, for example, a fridge with an improved energy efficiency rating compared to the old fridge, this is not an improvement, and the full cost of the new item is eligible for relief.

How to work out the amount of deduction

When you replace domestic items, you may sell, or part-exchange the old item. This may result in incidental costs of disposing of the old item or buying the new item. To work out the allowable deduction for the new item you should Add together the cost of the new replacement item and any incidental costs for disposing of the old item or buying the replacement. Deduct any amounts received on disposal of the old item. The cost of an equivalent item if it is an improvement on the old item.