Property Letting – Furnished or Unfurnished?

Do you let property furnished or unfurnished?

This has always been an important distinction, as only furnished lettings entitle you to the valuable annual wear and tear allowance of 10% of the rents. Now it is definitely worth reviewing whether you could show the property is furnished given that the renewals basis for replacing items in commercial or residential properties let unfurnished ceased from 6 April 2013.

It has recently become apparent that it is not always too difficult to show that a property is let furnished. HMRC guidance is that a property is furnished if it includes some (but not necessarily all) items that a tenant or owner-occupier would normally provide in unfurnished accommodation. That vague statement is then amplified and indeed the 10% allowance should be claimable where the property contains sufficient furniture, furnishings and equipment for normal residential use.

Care should be taken and proper documentation prepared from the outset prior to treating the let property as furnished so that if HMRC enquires into your return then it can be clearly demonstrated the basis on which the property qualifies as furnished let.  Failure to qualify as furnished letting may land you with an unexpected tax bill going back a number of years.

If you are currently letting properties unfurnished and like to evaluate whether you will qualify as furnished let or require guidance on what changes you need to make in order for your property to qualify as furnished then why not take advantage of our personal tax planning service and contact us today to discuss further.  We are always here to help you organise your affairs in a tax efficient manner.

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