Relief for Replacement Domestic Items
If you let a furnished or part-furnished residential property, you should be aware of the tax relief available for the cost of replacement domestic items.
This relief allows you to claim a deduction for replacing movable furniture, furnishings, household appliances and kitchenware in your rental property — provided certain conditions are met.
What is the relief for replacement domestic items?
The relief for replacement domestic items is directed at landlords who need to replace items in their letting properties which are no longer fit for purpose.
It does not apply to the initial purchase of such items — that is, when you first furnish the property you cannot claim this relief.
Instead, you must have provided the old item, and then replace it with a new one which is available for use exclusively by the tenant of the dwelling.
What kind of items qualify under replacement domestic items?
Examples of qualifying items under the relief for replacement domestic items include:
-
Movable furniture such as sofas, chairs, tables and wardrobes.
-
Furnishings and soft furnishings including carpets, curtains, rugs and bedding.
-
Household appliances like washing machines, fridges/freezers, dishwashers, vacuum cleaners.
-
Kitchenware and small items such as crockery, cutlery, plates, pans, utensils that are expected for domestic use.
Items that do not qualify include fixed items such as built-in kitchens, bathroom suites, boilers, radiators or central heating systems, because these are regarded as part of the building rather than movable “domestic items”.
Conditions you must satisfy
To claim relief for replacement domestic items, you must meet the following key conditions:
-
You carry on a property business which includes letting one or more dwelling-houses.
-
You have previously provided an old domestic item in the dwelling-house for use by the lessee, and you replace it with a new domestic item. The new item must be available for the exclusive use of the lessee and the old item must no longer be available for their use.
-
The new item must be used wholly and exclusively for the purposes of that property business (i.e., you must comply with the “wholly and exclusively” rule) and the expenditure would otherwise be disallowed as capital expenditure.
-
You have not claimed capital allowances in respect of the expenditure on the new item.
How much relief can you claim for replacement domestic items?
Under the relief for replacement domestic items you may claim a deduction for the cost of the new item (or the cost of an equivalent item) when calculating your taxable profits from the letting business.
Specifically:
-
If the new item is a “like-for-like” replacement of the old item, you may claim the actual cost of the new item (plus incidental costs such as delivery, installation and disposal).
-
If the new item is an improvement (i.e., a superior item compared to the item replaced), the claim is limited to the cost of an equivalent item of similar type and function — the “reasonable modern equivalent”.
-
If you receive any proceeds from the disposal or part-exchange of the old item, you must deduct that amount from the claim.
Example: A landlord replaces a broken washing machine that originally cost £150 with a new washer-dryer costing £325. The cost of a modern equivalent washing machine is £200. Because the new appliance is an improvement (washer-dryer rather than just a washing machine), the deductible amount is capped at £200 (the cost of a like-for-like replacement).
What has changed for 2025/26 and how does it affect this relief?
From 6 April 2025 (and for companies from 1 April 2025) the favourable tax regime for furnished holiday lettings (FHLs) is being abolished.
For landlords operating FHLs this means:
-
The special FHL tax benefits (such as distinct capital allowances on plant & machinery, and favourable CGT treatment) are no longer available for new expenditure or disposals after the effective date.
-
For new purchases, capital allowances on domestic items in FHLs will no longer be available; instead such landlords must rely on the relief for replacement domestic items, aligning with other residential letting businesses.
-
The relief for replacement domestic items remains available, but the overarching status of FHLs is now changed: those properties will simply be treated as part of your UK property business and claim accordingly.
Therefore, landlords should review their replacement programmes and ensure their claims for replacement domestic items are properly documented and justified, particularly where upgrades might be challenged by the tax authority.
Practical steps for landlords
-
Before replacing an item, check whether you have claimed any capital allowances for the original item — if so, the relief for replacement domestic items may not be available for that replacement.
-
Ensure the new item is for the exclusive use of the tenant and the old item is no longer in service.
-
Document the replacement: keep receipts for the new item, delivery/installation costs, disposal costs, and any sale or part-exchange amount for the old item.
-
If the new item is superior rather than equivalent, benchmark what a like-for-like replacement would cost and restrict the deduction accordingly.
-
Keep evidence of the condition of the old item (for example photos or maintenance records) to support that it needed replacement rather than being voluntarily upgraded.
-
Factor in the timing of replacements: with the changes in the FHL regime from April 2025, you may wish to evaluate replacement timing and whether claims for replacement domestic items are optimised.
How Trueman Brown can help
At Trueman Brown (landlords’ local accountants and tax advisers), we support landlords in understanding and claiming the relief for replacement domestic items correctly and in compliance with the updated rules for 2025/26.
If you have furnished or part-furnished lettings or are considering property investment, we will guide you through the relief requirements, review your replacement strategy, and ensure records and claims meet HMRC expectations.
Contact us at mark@truemanbrown.co.uk or call 01708 397262 to discuss how we can assist you with your property tax planning and relief claims.
FAQ
Q. What is the difference between the initial purchase of domestic items and a replacement under the relief for replacement domestic items?
A. The initial purchase of domestic items in a property (when the item is first provided) cannot be claimed under this relief. The relief applies only when you replace an existing item that was previously provided for tenant use.
Q. If I upgrade an item to a better model, can I claim the full cost under replacement domestic items?
A. No. If the new item is an improvement beyond a “reasonable modern equivalent”, the claim is limited to the cost of the equivalent item of similar type and function. Upgrades beyond that are not fully deductible.
Q. Does the relief apply if I operate a holiday-let business classified as a furnished holiday let?
A. Yes — but from April 2025 the FHL tax regime is abolished and FHLs will be treated in the same way as other residential lettings. You may therefore still claim the relief for replacement domestic items for replacements, but you cannot claim capital allowances on new purchases in the same way as previously.
Q. Can I include delivery, installation and disposal costs when claiming the relief?
A. Yes – incidental costs linked to the replacement (such as delivery and installation, and disposal of the old item) can be included in the deduction, subject to the usual rules.
Q. How long should I keep records for a claim under the relief for replacement domestic items?
A. You should keep the purchase invoice for the new item, evidence of disposal or sale of the old item, delivery/installation invoices, and documentation showing the old item’s condition. As HMRC may review claims for up to six years (or longer in some cases), retaining these records for at least six years after the end of the tax year is advisable.
Disclaimer: This blog provides general guidance regarding tax reliefs and is based on the law as of the publication date. Individual circumstances vary and you should seek tailored professional advice, which we at Trueman Brown would be happy to provide.
Recent Comments