Domestic Items Relief – Get Back To Basics

The cost of replacing domestic items is fully tax allowable subject to certain conditions.

1. There is actually a property business being carried out.
2. Domestic items are being REPLACED, not purchased for the first time.
3. The item is wholly and exclusively for use in the property business.

Domestic items are those that are generally moveable items that can be used by tenants. HMRC gives some guidance –

• Moveable furniture (sofas, beds, freestanding wardrobes etc.)
• Furnishings (carpets, curtains, blinds etc.)
• Household appliances (washers, fridges, kettles etc.)
• Kitchenware (Crockery, utensils, cutlery etc.)

Common mistakes to avoid

Fixed items. Items such as boilers, radiators and built-in furniture are not covered by the Domestic replacement rules. Any repairs or partial replacements are usually allowable expenses though. See our separate guide to repair expenses here.

Substantially upgrading items. The legislation covers ‘replacement’. Buying a new double sided Bosch fridge freezer to replace a 10 year old single unit isn’t exactly ‘like for like’. This doesn’t mean that the replacement item needs to be identical to the old one. Just needs to be reasonable.

Part Exchanging or Selling the old item. You got £100 for the old sofa on Facebook? Great! However, strictly speaking this needs to be subtracted from the cost of the replacement sofa. So the £1200 for the new one is reduced to £1100 for tax purposes. As always, make sure you keep invoices, receipts and records.

Holiday Lets are trading businesses so do not qualify for Domestic replacement rules. They do qualify for Capital Allowances, however, which are usually beneficial.

Here’s an example

Elwyn has a terraced house in Bangor. He has incurred the following expenses in 2022/23

Item	Cost
Redecoration of Lounge	£500
New Shed	£1200
Replacement of Mattress	£400
Replacement of TV	£1000
New Sofa	£2000

Redecoration of any room is straightforward; this is a repair and thus allowable.

Elwyn’s new shed is not a replacement however, so not allowable.

The new mattress is clearly a replacement, so it is allowable.

The new TV is a 60 inch OLED and a considerable upgrade on the item it replaced. Normally, only direct replacements are allowable. With TVs though, technology moves on quickly and even though the new TV is clearly superior to the old one, we can consider it a legitimate replacement. Allowed!

The sofa is new, not replacing an existing sofa, so not allowed. If Elwyn was operating as a holiday let, the sofa would be allowable of course.

The Replacement of Domestic Items relief offers landlords a valuable tool to reduce tax bills. It is important to keep receipts and any relevant evidence where items have been replaced. For any grey areas, it’s worth discussing the correct treatment before making a large purchase. A few minutes could save pounds down the line.

Get in touch with us for more information or speak to us about domestic item replacement.