This is a basis of tax relief commonly called the ‘renewals basis’ which has now been put on a statutory footing. This relief is not available to owners of qualifying FHLs as capital allowances continue to be the method of tax relief on capital expenditure for such properties. However, where the property does not satisfy the FHL criteria (see Chapter 3) then capital allowances cannot apply.

Prior to April 2013, owners of furnished residential property had a choice of basis when replacing items in the property. The owners could either claim the ‘renewals’ basis or claim a 10% wear and tear allowance if they did not qualify for capital allowances under the FHL regime.

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