Where a landlord lets a residential property (including from 6 April 2025 onwards, a furnished holiday let), they are not entitled to tax relief for replacement of domestic items when they purchase domestic items, such as furniture, furnishings, household appliances, and kitchenware. Instead, relief is given for the cost of replacing the item.
For the relief to be available, four conditions must be met.
Condition A is that the individual or company seeking to claim the relief is carrying on a property business that includes the letting of a dwelling house.
Condition B is that an old domestic item that has been provided for use in the dwelling house is replaced with the purchase of a new domestic item. The new item must be provided for the exclusive use of the lessee in the let property, and the old item must no longer be available for use by the lessee.
Condition C is that the expenditure is incurred wholly and exclusively for the purposes of the trade, but a deduction would be prohibited as the expenditure is capital.
Condition D is that capital allowances must not have been claimed in respect of the item.
Where the property in question is a furnished holiday let, it is important to check whether capital allowances were claimed where the old item was purchased before 6 April 2025. Under the former regime for furnished holiday lets applying before that date, landlords were able to claim capital allowances on the purchase of domestic items for furnished holiday lets.
Relief for replacement of domestic items is not available where Rent-a-Room relief has been claimed.
The relief
Under the relief, a deduction is allowed for the cost of a like-for-like replacement and any incidental costs, such as delivery or the cost of disposing of the old item or installing the new one. Where the old item is sold, the deduction is reduced by the sale proceeds.
Where the replacement is superior to the old item, the deduction is capped at the cost of a like-for-like replacement. For example, if a fridge was replaced with a fridge-freezer, the deduction would be capped at the amount of an equivalent fridge.
Where the old item is taken in part exchange, the deduction is the excess of the part-exchange value (plus any incidental costs).
Example of relief for replacement of domestic items
George lets a flat fully furnished. He replaces the two-seater sofa with a new sofa of a similar size and standard. The sofa cost £800 and delivery was £50. He also paid £70 for the council to dispose of the old sofa.
Under the rules for replacing domestic items, George is allowed a deduction of £920.
