Landlord Capital Allowances Calculator

How Replacement of Domestic Items Relief works

Since April 2016, UK landlords letting unfurnished or partly-furnished residential property can claim the cost of replacing domestic items as a deduction from rental income. This replaced the older "10% wear and tear allowance" that applied to fully-furnished lets only.

Items that qualify include: movable furniture (sofas, beds, tables), furnishings (curtains, rugs, linen), household appliances (fridges, washing machines, microwaves), kitchenware (crockery, cutlery). The first-time provision of any of these is not deductible — only replacements.

The "like-for-like" rule

You can only claim the cost of a "modern equivalent" of the item being replaced — not the cost of an upgrade. If you replace a £350 basic washing machine with a £500 premium model, only £350 is deductible (the like-for-like figure); the remaining £150 is treated as a non-allowable improvement.

The exception: where the original item is no longer made and the modern equivalent has the same function but is necessarily more advanced (e.g. you can't buy a non-Energy-Star fridge any more), the modern equivalent IS the like-for-like cost. HMRC's tests of "function" not "spec" are the operative ones.

The disposal proceeds offset

If you sell the old item — even for £20 on Gumtree — those proceeds reduce the deductible amount. Most landlords just dump or recycle the old item, in which case proceeds are zero and the full like-for-like cost is deductible.

What is NOT covered by RDIR

• Fixtures — boilers, integrated kitchen units, fitted bathrooms. These are part of the building structure and follow normal repair-vs-improvement rules. A like-for-like boiler replacement is a deductible repair; replacing a working boiler with a more efficient one to gain capacity is partly an improvement and is restricted similarly.
• The first time you furnish a property. Initial furnishing costs are capital and feed into CGT base cost, not rental deductions.
• Furniture for furnished holiday lets. FHL has different rules — capital allowances under the Annual Investment Allowance regime apply.
• Items used personally. Mixed-use items (e.g. a property you sometimes live in) need apportionment.

Worked example

Replacing a £350 basic washing machine with a £500 premium model, sold the old one for £20, higher-rate taxpayer:

• Like-for-like cost: £350
• Less disposal proceeds: £20
• Deductible: £330
• Non-allowable improvement: £150 (cost of new − like-for-like)
• Tax saved at 40%: £132
• Net cost: £500 (paid) − £20 (disposal) − £132 (tax saving) = £348

Common landlord mistakes

• Treating the first carpet as deductible. First-time carpets in an unfurnished let are capital, not deductible. Only replacements are.
• Claiming improvements as repairs. A new bathroom suite for a working old one is mostly improvement, not repair. The "like-for-like" doctrine still applies.
• Forgetting to keep receipts and old-item evidence. HMRC may ask for proof that an item being replaced existed — keep the old item's purchase records or photos.
• Mixing up RDIR with mortgage interest restriction. Mortgage interest is now a 20% tax credit, not a deduction. RDIR is still a full deduction from rental income.

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