Domestic items relief
HMRC allows a deduction to be claimed for the replacement (not initial purchase) of certain domestic items.
What are domestic items?
A domestic item is an item used domestically and a few examples are:
Moveable furniture - tables, beds, chairs
Furnishings - curtains and carpets
Appliances - fridge, freezer and washing machines
Small items - such as cooking utensils
Fixtures, such as a bath, toilet and fitted furniture do not qualify as domestic items.
What are the conditions and tax relief available?
A few conditions have to be met to qualify for domestic items relief.
The first condition is that it can’t be an initial purchase of an item - it has to be a replacement. If you purchase a new property and furnish it, the initial furnishings will not qualify for tax relief.
As long as the new item is replacing an existing one and is broadly the same quality and standard as the previous one then the full cost of the replacement is tax deductible.
If the old item is sold, the amount received is deducted from the cost of the new item. For example, if you sell an old chair for £200 and then purchase a similar quality chair for £500, the deduction against profits would be £300.
It’s also worth noting that if the replacement is of a higher quality than the original item, the deduction is limited to the cost that a like-for-like replacement would have been.
You don’t have to be letting a property as fully furnished in order to qualify. If the property is let unfurnished but you have to replace a domestic item such as the carpets, as long as the above criteria are met then a claim can be made.
You should keep receipts for all items claimed under this scheme for your records.
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