This impoprtant allowance amounts to 10% of the annual rental income received from the property. The rule is only valid for investors and it applies in the following way...

It is calculated after deducting charges or services that a tenant would normally bear, but are, in fact, borne by you (e.g. water supply, council tax, etc.).

The allowance is used to cover the cost of renewing furniture and furnishings that would normally be purchased by the tenant in an unfurnished property.

Fully Furnished Accommodation

The 10% wear and tear rule can only be used if 'fully furnished' accommodation is provided.

In order to satisfy the criteria of a fully furnished property, then the property must be ready, so that tenants can simply bring their personal belongings and start to live in the accommodation.

This means that one would expect the following furniture and furnishings to be provided as part of a fully furnished property:

• Suites, tables & chairs
• Flooring i.e. carpets, laminate flooring
• Curtains, blinds, bed linen
• Televisions, microwaves, fridge, freezers and washing machines
• Cutlery & crockery
• Framed pictures & ornaments

Instead of offsetting the costs of each renewal, you claim the 10% allowance.

Using the 10% wear and tear allowance

Mr Investor has a furnished luxury apartment that he lets out to a professional working person. His annual rental income is £10,000 per annum. The income includes service charges of £1,000 per annum. He decides that he wants to make use of the 10% wear and tear allowance, which means that he can offset another £900 against his income. The allowance is calculated after the rates and services charges have been deducted from the gross income.