Landlord replaces a sofa, fridge or washing machine: replacement of domestic items relief, worked for three items

A landlord client has a furnished flat. The sofa is worn out and the fridge has failed, so the agent arranges new ones and the landlord asks, reasonably, whether the cost comes off the tax bill. A purchase of this kind is capital, so it would not normally be deductible. Replacement of domestic items relief is the rule that lets it be, for replacements. This guide sets out what the rule says and works it for three items.

What the rule covers

The HMRC manual says the relief "allows a deduction for the replacement (not initial purchase) of certain domestic items." On that page:

• Covered: moveable furniture, furnishings, household appliances and kitchenware.
• Not covered: fixtures such as baths, washbasins, toilets and built-in wardrobes, and boilers and water-filled radiators. Replacing a fixture may instead be a repair.
• Four conditions: the landlord runs a property business that includes letting a dwelling-house; an old item is replaced with a new one for the tenant's exclusive use and the old one is no longer available to the tenant; the spending is not barred by the wholly and exclusive rule but would otherwise be barred as capital; and no capital allowances have been claimed on the new item.
• Excluded lets: the dwelling is, wholly or partly, a furnished holiday let, or Rent-a-Room relief is claimed for it.

The first purchase when a flat is furnished for the first time is not covered. Only a replacement is.

The sums

The first two come from the manual's own examples: a sofa sold for £100 and replaced at £600 gives £500, and an £800 fridge with a £300 trade-in gives £500, because the trade-in value itself gives no deduction. The washing machine is our own arithmetic on the same rules: £700 plus £60 of incidental costs, less £50 received, is £710.

The three items together come to £1,710.

When the new item is better

The manual says that where the new item is not substantially the same standard, the deduction is the lesser of the cost of the new item and the cost of a like-for-like replacement of the old one. Being brand new does not count as an improvement.

Our example: the old sofa would cost £450 to replace like for like and the landlord buys a £900 leather one. The deduction is capped at £450. The other £450 is not deductible under this relief. How the capped figure combines with money received for the old sofa was not on the part of the page I read, so ask the landlord's accountant.

What to tell the landlord, and what to keep

• Keep the invoice for the new item and a record of what the old one sold for or was traded in for.
• Note delivery and disposal charges on the same invoice.
• Do not put a boiler or a built-in wardrobe through this relief.
• A deduction is taken from profit, not paid back, so its value depends on the landlord's own tax position, which the agent should not state.

For related landlord sums see the £1,000 property allowance against expenses and the mortgage interest reduction. The agent's year-end pack can also lean on the compliance checklist.

I read manual page PIM3210 only. I did not read how this relief interacts with the property allowance or the rules for companies beyond the start dates it gives, so landlords should ask their accountant.

Overlyft builds AI staff who join your lettings team, pick out replacement purchases on each managed property's maintenance ledger, match them with what was received for the old item, and prepare a one-page note for the landlord's accountant for you to check before it is sent.

This is general information, not tax advice. Landlords should check GOV.UK and their own figures, or ask their accountant.