Replacement of domestic items relief gives residential landlords a deduction for replacing certain movable items provided for a tenant’s use. It is not a general furniture allowance and does not cover the initial cost of equipping a property. The relief applies only when an existing domestic item is taken out of use and replaced, and the deduction may be restricted where the replacement is an improvement.
The calculation should be completed item by item. Treating a full refurbishment as one general expense risks including initial purchases, fixtures and improvements that fall outside the statutory conditions.
When Replacement of Domestic Items Relief Applies
Four core conditions must be satisfied. The taxpayer must carry on a property business that includes letting a dwelling; an old domestic item must be replaced by a new item provided exclusively for the tenant’s use; the expenditure must be incurred wholly and exclusively for the property business; and capital allowances must not have been claimed on the replacement.
Qualifying items can include movable furniture, furnishings, household appliances and kitchenware. Beds, sofas, curtains, carpets, fridges, washing machines, crockery and cutlery may fall within the relief. Fixtures forming part of the property, such as baths, fitted sanitary ware, central-heating systems and integral electrical installations, are considered under the normal repair or capital rules instead.
The conditions for replacement of domestic items relief require the old item to cease being available for the tenant’s use. Moving an old sofa to another room while adding a new sofa is not a replacement if both remain available. The initial purchase of an item for a newly furnished property is also outside the relief because no domestic item has been replaced.
Like-for-Like Replacement and Improvements
Where the new item is broadly equivalent to the old one, the deduction is normally the cost of the replacement, adjusted for disposal proceeds and qualifying incidental costs. A new item is not automatically an improvement merely because it is unused or incorporates normal technological development.
A modern, more efficient washing machine may still be equivalent to the old item. The comparison is the cost of a modern item of broadly the same standard.
Where the new item is materially superior, the relief is limited to the lower of the actual expenditure and the cost of an equivalent replacement. If a landlord replaces a basic freestanding fridge with a premium integrated appliance as part of a redesigned kitchen, only the amount attributable to an equivalent replacement may qualify. Installation work connected with creating a new fitted kitchen may need a separate capital or repair analysis.
Replacement of Domestic Items Relief for Improvement Expenditure
An improvement restriction does not necessarily deny the whole deduction. The landlord should establish the cost of a modern equivalent to the old item and claim that amount, subject to the other conditions. The additional cost of choosing a higher specification remains outside replacement of domestic items relief.
Evidence can include comparable quotations and product specifications. A documented comparison made when the item is purchased is stronger than a percentage disallowance applied after the event.
The ordinary rental income expense guidance confirms that the relief applies to replacement rather than initial provision and that an improvement element is restricted. Landlords using the £1,000 property allowance cannot also deduct actual property expenses, including replacement of domestic items relief, for the same income.
Delivery, Installation and Disposal Costs
Delivery, installation and the cost of removing the old item may increase the deduction where they relate directly to the replacement. Wider improvement costs should not be included merely because they appear on the same invoice.
Any money or value received for the old item reduces the allowable amount. If a landlord buys an equivalent sofa for £800, pays £50 delivery and receives £100 from selling the old sofa, the potential deduction is £750. Trade-in allowances require the same treatment, so the records should identify the gross cost and the value attributed to the old item.
Former Furnished Holiday Lettings Require Care
The separate furnished holiday lettings regime ended from 6 April 2025 for Income Tax and 1 April 2025 for Corporation Tax. A property that previously qualified is now generally considered under the ordinary property business rules. Replacement of domestic items relief may therefore become relevant for later expenditure where the normal conditions are met.
Rent-a-Room relief remains a separate restriction. A landlord who claims Rent-a-Room relief for the relevant receipts cannot also claim replacement of domestic items relief for that dwelling for the same period.
Maintain an Item-Level Replacement Schedule
A robust schedule should record the old item, replacement date, equivalent replacement cost, improvement element, incidental costs and disposal proceeds. This helps prevent initial furnishing costs from being included.
The deduction should be incorporated into the property accounts supporting the landlord tax return. Where a refurbishment combines repairs, fitted installations, furniture replacements and improvements, specialist tax advice can establish which costs qualify under each rule before the return is finalised.
Disclaimer: This article is provided for general guidance only and does not constitute personal tax, legal or financial advice. The correct tax treatment depends on the specific facts, applicable legislation and HMRC practice at the relevant time. You should contact us for advice tailored to your circumstances before taking or refraining from any action.
