Unit 19 Wear and Tear Allowance

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NickyW
NickyW Registered Posts: 97 Regular contributor ⭐
in AAT Level 4 (Level 8 in Scotland)
Hi there - am I right in thinking that wear and tear allowance is not pro-rated if the rental income for a period of less than 12 months?
Eg rent Jan10-Apr10 @ £100 = 300

Wear and Tear Allowance would be 10% x 300 = 30 Not 30 x 3/12.

Hope I am making sense!

Nicky

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  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    from HMRC Site

    PIM3200 - Furnished residential property: wear and tear allowance
    Summary
    Income from furnished lettings is part of the taxpayer's rental business. Generally the same rules apply as for other lettings.

    But where a taxpayer lets a residential property furnished, plant and machinery capital allowances can’t be claimed on furniture, furnishings or fixtures within the property. Instead a deduction can be claimed for either:

    •a wear and tear allowance of 10% of the ‘net rent’ from the furnished letting to cover the depreciation of plant and machinery, such as furniture, fridges etc supplied with the accommodation,
  • SusieQtips
    SusieQtips Registered Posts: 65 Regular contributor ⭐
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    NickyW
    NickyW wrote: »
    Hi there - am I right in thinking that wear and tear allowance is not pro-rated if the rental income for a period of less than 12 months?
    Eg rent Jan10-Apr10 @ £100 = 300

    Wear and Tear Allowance would be 10% x 300 = 30 Not 30 x 3/12.

    Hope I am making sense!

    Nicky

    I understand wear & tear allowance is 10% of rent received, therefore already pro rated, but I understand it's 10% of rent received AFTER the deduction of council tax & water rates.
    e.g
    rent received for year £2000 (only rented for 6 months)
    council tax £500
    water rates £200
    wear & tear allowance= £2000-£700(500+200)=1300@10%= wear & tear allowance £130
    I have yet to take PTC so if someone else could confirm this is correct, it would be appreciated.
  • reader
    reader Registered Posts: 1,037 Beyond epic contributor 🧙‍♂️
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    Hi Susie

    I think you're correct

    I think you have to deduct any council tax and water rates paid by the landlord and any irrecoverable bad debts written off from rental income before you multiply by 10%

    Rental income (less) council tax paid by landlord (less) water rates paid by landlord (less) irrecoverable bad debts = Y

    Y x 10% = wear and tear allowance

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