With effect from April 2013, the renewals allowance for the replacement of plant other than trade tools will no longer be available.

For residential rental properties the renewals basis gives a specific deduction for expenditure on the replacement of fixtures integral to buildings (e.g. bathroom fittings, central heating, boilers, windows and other similar assets).   The relief is commonly used by landlords of residential accommodation, who are generally not entitled to claim Capital Allowances on the cost of plant and machinery, such as furniture and white goods installed in the accommodation, except in the case of furnished holiday lettings.

Although there are some exceptions, where there is expenditure on certain fixtures and fittings generally where a property is let furnished, landlords have previously been able to choose between the renewals basis or the 10% ‘Wear and Tear Allowance’.  This is a 10% allowance based on net rental income and is intended to give a form of relief in respect of depreciation of plant and fixtures.  Net rental income for this purpose is the total rent received in the year less charges and services paid for by the tax payer that would normally be borne by the tenant (e.g. council tax and water costs).   Landlords of unfurnished properties however have only been able to obtain a tax deduction using the renewals basis and therefore will be most affected by this change in legislation.