Domestic Items Relief for UK Landlords

What Is Domestic Items Relief?

Replacement of Domestic Items Relief was introduced for Income Tax purposes from 6 April 2016 and for Corporation Tax purposes from 1 April 2016. It replaced the former Wear and Tear Allowance and applies to qualifying residential property businesses.

The relief allows a landlord to deduct the cost of replacing certain domestic items used by tenants in a dwelling house. It is designed to provide tax relief for the cost of maintaining the standard of furniture, appliances and household contents supplied with a rental property.

The key point is that the landlord must be replacing an existing item that was previously available for the tenant’s use. The initial cost of furnishing a property is normally capital expenditure and does not qualify under this relief.

Which Domestic Items Can Qualify?

Qualifying domestic items commonly include:

• Movable furniture such as beds, wardrobes, tables, chairs, sofas and freestanding cupboards
• Furnishings such as curtains, blinds, carpets, rugs, linen and removable floor coverings
• Household appliances such as televisions, fridges, freezers, washing machines and dishwashers
• Small electrical appliances such as kettles, toasters, vacuum cleaners and microwaves
• Kitchenware such as crockery, cutlery, pans and other household utensils

The item must be provided for the tenant’s use in residential accommodation and must not be a fixture forming part of the building.

Items That Do Not Normally Qualify

Domestic item tax relief does not normally apply to:

• The original purchase of furniture or appliances for a newly furnished property
• Fixtures such as baths, toilets, fitted washbasins and central heating systems
• Structural parts of the building
• Items used mainly by the landlord rather than the tenant
• Replacement costs that have already been claimed under another tax rule
• Expenditure that is not incurred wholly and exclusively for the property business

Fixtures and integral parts of the property may instead fall under the normal repair or capital expenditure rules, depending on the nature of the work.

The Conditions for Claiming Domestic Items Relief

A claim normally requires all of the following conditions to be satisfied:

• An old domestic item was provided for use by tenants in residential accommodation.
• The old item is no longer available for use by the tenant.
• A new item is purchased as a replacement.
• The new item is provided for the tenant’s use.
• The expenditure is incurred wholly and exclusively for the property business.
• No capital allowance is claimed on the same expenditure.

The old item does not necessarily need to be physically destroyed. It may be sold, traded in, donated or removed from the rental property, provided the replacement conditions are met.

How the Allowable Deduction Is Calculated

The allowable deduction is broadly calculated as:

Cost of an equivalent replacement item + qualifying incidental costs − disposal proceeds

Where the replacement is an improvement beyond the nearest reasonable modern equivalent, the deduction is restricted to the amount that would have been spent on an equivalent replacement.

Worked Example: Like-for-Like Replacement

A landlord replaces a broken washing machine with a new standard washing machine costing £420. Delivery and installation cost £35, and disposal of the old machine costs £20. The landlord receives no money for the old appliance.

Worked Example: Disposal Proceeds

A landlord replaces a bed with an equivalent new bed costing £500. Delivery costs £30, and the old bed is sold for £75.

The allowable deduction is:

£500 + £30 − £75 = £455

The £75 received for the old bed reduces the amount of relief available.

Replacement Versus Improvement

There is an important distinction between replacing an item and improving it. A landlord cannot normally claim the full cost of a substantially superior item where the upgrade goes beyond a reasonable modern equivalent.

If the replacement is better only because technology and normal product standards have advanced, it may still be treated as an equivalent replacement.

For example, replacing an old fridge with a modern energy-efficient fridge of broadly similar size and quality would not normally be treated as an improvement merely because modern models use less electricity.

Likewise, replacing a five-year-old budget washing machine with a current budget model is generally a replacement rather than an improvement, even if the newer machine has modestly improved efficiency or features.

Example of a Restricted Improvement

A landlord replaces a basic sofa costing approximately £600 with a premium designer sofa costing £2,000. A comparable modern replacement would have cost £700.

The claim would normally be restricted to the cost of the reasonable equivalent, together with qualifying incidental costs. The additional amount paid for the premium upgrade would not qualify.

What Is a Reasonable Modern Equivalent?

A reasonable modern equivalent is a current product that performs broadly the same function and is of a similar standard to the old item.

Changes caused by ordinary technological development do not automatically make an item an improvement. Examples may include:

• An energy-efficient fridge replacing an older less-efficient model
• A modern flat-screen television replacing an older television of similar quality
• A contemporary washing machine replacing an older machine in the same market range
• LED lighting in a movable lamp replacing an older type of bulb

The test is not whether the new item is technically better in every respect. It is whether the landlord has purchased a broadly equivalent replacement or chosen to upgrade the quality, capacity or specification substantially.

Initial Purchases Do Not Qualify

The first purchase of a domestic item for a property does not qualify for relief on domestic item expenditure under this specific rule.

For example, if an unfurnished property is converted into a furnished rental and the landlord buys beds, sofas, wardrobes and appliances for the first time, those initial purchases do not qualify as replacements.

A later replacement of those items may qualify, provided the other conditions are satisfied.

Does the Relief Apply to Unfurnished Properties?

Yes. The relief is not restricted to fully furnished lets.

A landlord of an unfurnished or partly furnished residential property may claim when replacing a qualifying domestic item that was provided for the tenant. For example, a replacement fridge, carpet or curtain may qualify even if the property is otherwise described as unfurnished.

The key issue is whether a qualifying item was provided and later replaced, not how the tenancy is marketed. This relief applies to conventional rental properties rather than to someone simply letting a room in their own home, where tax-free income from letting a room in your home follows separate rules entirely.

Replacement of Built-In Appliances

The treatment of built-in appliances depends on whether the expenditure is more appropriately treated as a repair to the property or as replacement of a domestic item.

Replacing a fitted kitchen appliance may sometimes form part of repairing or renewing the kitchen installation. In other cases, the appliance may be treated separately.

Landlords should consider:

• Whether the appliance is a fixture
• Whether it forms part of a larger repair
• Whether the whole kitchen or installation has been replaced
• Whether the work improves the property beyond its original condition

The same expenditure must not be claimed both as a repair and under domestic items relief.

Repairs Versus Replacement of a Domestic Item

If a landlord repairs an existing domestic item, the repair cost may be deductible under the normal property business expense rules where it is incurred wholly and exclusively for the rental business. This sits alongside the wider range of tax deductions landlords should know about, many of which follow similarly specific conditions.

If the item is discarded and replaced, Replacement of Domestic Items Relief may apply instead.

Private Use and Non-Commercial Lettings

Expenditure must be incurred wholly and exclusively for the property business.

Where an item is also used privately by the landlord, the deduction may need to be restricted to the identifiable business element. Relief may be unavailable where the property is let on noncommercial terms and the expense cannot be shown to have been incurred wholly and exclusively for the rental business.

This can be relevant where a property is let to family members below market rent or where the landlord retains significant private use.

Property Allowance and Domestic Items Relief

An individual who uses the property allowance for landlords instead of deducting actual property expenses cannot also claim Replacement of Domestic Items Relief for the same property business and tax year.

The landlord should compare:

• The amount of the property allowance
• Total allowable running costs
• Mortgage finance-cost treatment
• Potential domestic item replacement claims

Where actual expenses exceed the property allowance, claiming actual costs may produce a better result.

Former Furnished Holiday Lettings

The separate Furnished Holiday Lettings tax regime was abolished from 6 April 2025 for Income Tax and Capital Gains Tax and from 1 April 2025 for Corporation Tax.

Under the former regime, qualifying furnished holiday letting businesses could claim capital allowances on certain furniture and equipment, while Replacement of Domestic Items Relief was generally unavailable.

Following abolition, new expenditure on furniture and furnishings in former furnished holiday lets no longer receives the old FHL capital allowance treatment. Replacement of Domestic Items Relief may now be available for qualifying replacement items.

Capital allowance pools created before abolition may continue to produce writing-down allowances or balancing adjustments under transitional rules.

Cash Basis and Domestic Items Relief

Most individual landlords calculate property income using the cash basis unless they elect to use traditional accounting or an exception applies.

Replacement of Domestic Items Relief remains available under the cash basis. The deduction is generally recognised when the qualifying cost is paid.

Landlords using traditional accounting should ensure the expense is recognised in the correct accounting period and adjusted appropriately for tax.

Jointly Owned Rental Properties

Where a rental property is jointly owned, each owner should claim their appropriate share of the qualifying replacement cost.

The allocation will normally follow the way rental income and property profits are divided for tax purposes.

Married couples and civil partners living together are generally taxed on jointly owned property income in equal shares unless a valid declaration based on unequal beneficial ownership applies.

How Domestic Items Relief Affects Rental Profits

The allowable deduction reduces taxable property business profit for the relevant tax year.

For example, a landlord has:

• Rental income of £24,000
• Other allowable expenses of £7,000
• A qualifying replacement furniture deduction of £1,200

The property profit before any separate residential finance-cost tax reduction would be:

£24,000 − £7,000 − £1,200 = £15,800

This figure would then be used to calculate any separate rental business mortgage relief the landlord is entitled to, since mortgage interest is treated differently from other property expenses.

The tax saving depends on the landlord’s marginal Income Tax rate and wider tax position. For landlords with a mortgage on the property, understanding mortgage interest tax relief for landlords alongside domestic items relief gives a fuller picture of the overall tax position.

How to Report Domestic Items Relief to HMRC

Individual landlords normally report replacement costs on the UK property pages of their Self Assessment tax return.

The claim should reflect:

• The allowable equivalent replacement cost
• Qualifying delivery, installation and disposal expenses
• Any restriction for improvement
• Any proceeds from selling or trading in the old item
• Any restriction for private or non-business use

Companies include the deduction in the property business computation supporting the Corporation Tax return.

Records Landlords Should Keep

To support a claim under domestic items relief HMRC rules, landlords should retain:

• Purchase invoices for the new item
• Receipts for delivery and installation
• Disposal or recycling invoices
• Evidence of sale or trade-in proceeds
• Details of the item replaced
• Photographs or inventories showing the old item
• Tenancy inventories
• Evidence supporting the cost of an equivalent item where an upgrade was purchased
• Bank and credit card statements
• A calculation showing how the claim was determined

Clear records are particularly important when the new item is substantially more expensive than the old one or where part of the cost has been restricted.

Common Domestic Items Relief Mistakes

• Claiming the original cost of furnishing a property
• Claiming the full cost of a substantial upgrade
• Failing to deduct sale or trade-in proceeds
• Claiming the same cost as both a repair and a domestic item replacement
• Including fixtures that form part of the building
• Claiming private-use costs
• Using the property allowance and actual replacement expenses in the same tax year
• Failing to keep evidence of the old item
• Assuming relief is available only for fully furnished properties
• Continuing to use the former Wear and Tear Allowance

Planning Replacement Purchases

Landlords can make the claim easier to support by planning replacements carefully.

Before purchasing a new item:

• Record the make, model, age and condition of the old item.
• Identify the cost of a comparable modern replacement.
• Separate any premium upgrade from the basic replacement cost.
• Retain delivery, installation and disposal invoices.
• Record any money received for the old item.
• Update the tenancy inventory.

This evidence helps demonstrate that the claim represents a genuine replacement and that any improvement restriction has been applied correctly. Planning replacement purchases carefully like this is a small but meaningful part of a broader strategy to maximise your rental property ROI through effective tax planning.

Final Guidance on Domestic Items Relief

Domestic items relief is available when a landlord replaces qualifying movable furniture, furnishings, appliances or kitchenware used by tenants. It does not normally cover the first purchase of an item or the additional cost of a substantial upgrade.

The correct deduction is based on the cost of an equivalent replacement, plus qualifying incidental costs, less proceeds received for the old item. Keeping invoices, inventories and evidence of the original item will help support the claim if HMRC reviews the property return.

Domestic Items Relief Case Study

Emma owned several residential rental properties and visited our Wimbledon office after replacing furniture and appliances in one of her rental homes. She was unsure whether the costs qualified for domestic items relief or whether she could claim the full amount because some of the replacement items were more expensive than the originals. Before submitting her Self Assessment tax return, she wanted to ensure her claim complied with HMRC guidance.

After reviewing Emma’s invoices, tenancy inventory and replacement purchases, we explained how replacement of domestic items relief applies only to genuine replacement items provided for tenants and not to the initial furnishing of a property. We identified which costs qualified, calculated the allowable deduction for equivalent replacement items, included eligible delivery and installation costs, and adjusted the claim for the proceeds received from selling one of the old appliances. We also explained how HMRC distinguishes a reasonable modern equivalent from a substantial upgrade, ensuring only the qualifying expenditure was included.

During the consultation, we advised Emma on maintaining detailed records of replacement purchases, disposal receipts and tenancy inventories to support future claims if HMRC requested evidence.

By the end of the meeting, Emma understood how to claim domestic items relief correctly, avoid common errors and reduce her taxable rental profits while remaining fully compliant with HMRC requirements.