What was the wear and tear allowance under section 308A of ITTOIA 2005?

Section 308A allowed landlords of furnished residential lettings to claim a flat-rate wear and tear allowance, typically 10% of net rent, as a deduction against rental income. This was an alternative to deducting the actual cost of replacing furnishings and household equipment provided with the property.

When was the wear and tear allowance repealed and what replaced it?

The wear and tear allowance was repealed by section 74(1)(a) of the Finance Act 2016, effective from the 2016–17 tax year onwards. It was replaced by the replacement furniture relief, which allows landlords to deduct only the actual cost of replacing furnishings, appliances, and similar items when a replacement purchase is made.

How did the wear and tear allowance originally become part of United Kingdom tax legislation?

The wear and tear allowance originally operated as an extra-statutory concession granted by HMRC. In 2011, the Enactment of Extra-Statutory Concessions Order (S.I. 2011/1037) formally enacted it into law as sections 308A to 308C of the Income Tax (Trading and Other Income) Act 2005, giving it a proper legislative foundation.

How is replacement furniture relief different from the old wear and tear allowance?

Unlike the old wear and tear allowance, which permitted an annual flat-rate deduction regardless of actual expenditure, replacement furniture relief only allows landlords to deduct the actual cost incurred when replacing furnishings or appliances. No deduction is available unless a replacement purchase is genuinely made during the tax year.

Income Tax (Trading and Other Income) Act 2005 section 308A

Wear and tear allowance election

Section 308A provided landlords of furnished residential lettings with the option to elect for a wear and tear allowance instead of claiming the actual cost of replacing furnishings, but this provision was removed from the tax year 2016–17 onwards.

Section 308A allowed landlords of furnished residential properties to claim a flat-rate wear and tear allowance as a deduction against rental income, as an alternative to deducting actual replacement costs of furnishings and equipment.
The provision originated from the Enactment of Extra-Statutory Concessions Order 2011, which put a long-standing HMRC concession on a statutory footing.
Sections 308A to 308C, which together governed the wear and tear allowance rules, were all removed by section 74(1)(a) of the Finance Act 2016.
The repeal took effect from the 2016–17 tax year onwards, after which landlords could instead claim relief only for the actual cost of replacing furnishings under the replacement furniture relief rules.

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