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Neverwhere

Hmrc Wear & Tear Consultation

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HMRC have issued a public consultation document for "businesses, individuals, tax advisers, professional bodies and any other interested parties involved in the letting of residential property" to comment on Replacing Wear and Tear Allowance with Tax Relief for Replacing Furnishing in Let Residential Dwelling-Houses.

The direct download link is here and comments are open until 09/10/2015 if anyone would like to write in to wearandtear.replacement@hmrc.gsi.gov.uk on the subject.

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The wear and tear allowance was originally developed specifically because it cost so much to check the tax allowances for replacement of furnishings in furnished lets. The idea was that admin savings would outweigh the lost revenue. In 2014, HMRC stopped claims for replacement or renewal of furnishings, and made the 10% W&T allowance the only allowance.

I suspect the intention to reverse that decision is a political one, rather than a pragmatic one by the tax collectors themselves. Hence HMRC are looking for an excuse not to implement it.

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So will they do this for changes proposed for mortgage interest too?

Unlikely, they would have done so by now and they haven't. Also, I would have thought the mortgage interest changes are much easier to administer.

Edited by Neverwhere

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This will be the Civil Service Humphreys fighting it along the lines of "we don't have enough staff to process it".

Conclusion of the review: "there is no evidence the change will collect more taxes after the extra costs of collection are taken into account so we've decided to stay as we are. A decisive government is one that is prepared to implement evidenced based policy and if some of our initial early thoughts look like certain assumptions are 'ambitious', then it is a brave government that takes an alternative firm direction on behalf of hard working civil servants landlords people."

Cheer up hotairmail.

Minister: I'm getting a lot of e-mail I intend to ignore. Is there a way to appear to not be ignoring it?

Humphrey: We could offer a public consultation and review the evidence.

Minister: Review?

Humphrey: Yes, minister. Review, then ignore.

Minister: But Humphrey, they'll still be angry - they won't tolerate being ignored.

Humphrey: But, Minister, they are buy-to-let investors. If they could write they'd have done something else.

Minster: But they can write - look at all the e-mails!

Humphrey: O-S-B-O-U-R-N-E

Minister: No, it's O-S-B-O-R-N-E

Humprhrey: Tell that to Ctrl+V

Minister: I take your point. Please publicly f**k both them and the horse they road in on.

Humphrey: You mean continue to publicly f**k both them and the horse they road in on?

Minister: Indeed.

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www.property118.com/removal-of-wear-and-tear-allowance-consultation-by-hmrc/76748/

Interesting. Landlords can't understand why wear and tear doesn't apply to the initial fitting out of a property.

:) I guess fitting do experience some wear and tear during installation! :)

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Cheer up hotairmail.

Minister: I'm getting a lot of e-mail I intend to ignore. Is there a way to appear to not be ignoring it?

Humphrey: We could offer a public consultation and review the evidence.

Minister: Review?

Humphrey: Yes, minister. Review, then ignore.

Minister: But Humphrey, they'll still be angry - they won't tolerate being ignored.

Humphrey: But, Minister, they are buy-to-let investors. If they could write they'd have done something else.

Minster: But they can write - look at all the e-mails!

Humphrey: O-S-B-O-U-R-N-E

Minister: No, it's O-S-B-O-R-N-E

Humprhrey: Tell that to Ctrl+V

Minister: I take your point. Please publicly f**k both them and the horse they road in on.

Humphrey: You mean continue to publicly f**k both them and the horse they road in on?

Minister: Indeed.

:lol::lol::lol::lol::lol:

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The wear and tear allowance was originally developed specifically because it cost so much to check the tax allowances for replacement of furnishings in furnished lets.

HMRC don't actually check anything, unless they decide to control someone's tax affairs. You send your figures to HMRC and they accept what you tell them.

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So will they do this for changes proposed for mortgage interest too?

The legislation change for mortgage interest is already included in the new 2015 Finance Bill which is likely to become law by October. There will be no consultation.

Incidentally, I'm not sure why everyone's assuming that landlords will be universally against the removal of the W&T allowance. The allowance only benefits landlords of fully furnished dwellings, whereas this new tax deduction will be available to ALL landlords, except for those with funished holiday lettings. It means for example that someone who replaces a worn carpet in a property will be able to claim a deduction, even if there are no other furnishings in that property. Currently no relief is avaliable to them for this.

I would therefore expect the majority of landlords to be very happy with the proposal - it's just that they may not yet be aware that the new regime will apply to them. The ones who are going to be really hit by this measure are London landlords with high value furnished properties where the current 10% allowance gives a wholly disproportionate amount of relief due to the high rental income.

Main problems I foresee:

1) Landlords claiming for expenditure relating to their principal private residence.

2) The interpretation of an 'improvement' to the replaced item. HMRC gives an example of a washing machine (cost brand new = £400) replaced with a washer-dryer (cost = £600). Only £400 would be deductible, as the drying capability is an improvement.

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