Renting furniture

[Brightonian]

This is something I have never encountered before. A client has a number of buy to let properties (all let fully furnished) and has just bought a new one. There have been delays and he will not be able to buy furniture for the property before the tenants move in. He is thinking of hiring furniture instead for the first year of the rental and will then buy furniture for the property at that time. He has asked if the costs of hiring the furniture will be allowable against income tax. My initial thought is that they will not be allowable but that he will be able to claim the usual 10% wear and tear allowance instead. Or is there any merit in the view that the hire charges are wholly and exclusively for the purposes of the business and he can claim them but not the 10% allowance?Has anyone come across this situation before or have any thoughts on the matter?

[robbob]

Hello Maggie

Or is there any merit in the view that the hire charges are wholly and exclusively for the purposes of the business

I would have thought not - i think there was a similar thread a year or two back on here that you may be able to find asking similar question.

The hire costs would be specifically in relation to said items covered by wear and tear - the hmrc wear and tear guidance in the manual doesn't specifically say purchase of assets - so i would say the quoted bit (below) equally applies to purchase or lease if you take advice given as being accurate- surely if leasing was ok it would be a commonly used tactic and confirmed as being ok somewhere in writing by some sort of Authority (other than Cartman) on the matter.

The 10% wear and tear allowance covers things like:

movable furniture or furnishings, such as beds or suites,

One point of interest is that hmrc have finally updated the Property income manual to update their thoughts on how things work now that how they used to be

[Brightonian]

Thank you, Robbob. That is very helpful. It seems that, no matter how long you've worked in tax, clients can still come up with something you've never encountered before!

[section 44]

I would expect hire charges to be deductible