Replacement of Domestic Items Relief

Replacement of Domestic Items Relief allows residential landlords to deduct the cost of REPLACING domestic items in furnished lettings, furniture (sofas, beds), white goods (fridges, washing machines), carpets, curtains, crockery, cutlery, similar household items. **CRITICAL**: only REPLACEMENT qualifies; INITIAL FIT-OUT when a property is first let does NOT qualify. **Qualifying conditions (all four must be met)**: (1) business includes letting a dwelling-house; (2) an OLD item is replaced with a NEW one (like-for-like, not just an upgrade); (3) expenditure would be capital + not prohibited by wholly-and-exclusively rule; (4) capital allowances have NOT been claimed on the same expenditure. **Deduction amount**: for like-for-like replacement = full cost of new item + disposal costs, less proceeds from selling old item. For UPGRADE (better than like-for-like) = CAPPED at equivalent like-for-like replacement cost. **What does NOT cover**: initial purchase when let first begins; Rent-a-Room properties; (previously) FHL properties, but from April 2025 FHL abolition, former FHLs now WITHIN Replacement of Domestic Items scope.

Last reviewed: 23 May 2026

Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact HMRC. Read our editorial scope →

What this relief is, in plain English

Replacement of Domestic Items is the UK's relief for residential landlords replacing furniture, white goods + similar items in furnished lettings. It replaced the older Wear and Tear Allowance from 6 April 2016, a more accurate cost-recognition mechanic that allows actual replacement costs rather than a flat 10% notional allowance. The relief is narrow but useful. Only REPLACEMENT costs qualify, initial fit-out when a property is first let is NOT deductible (becomes part of the property's cost basis for eventual CGT). Like-for-like replacement gets full deduction; upgrades are capped at the equivalent like-for-like cost (the excess upgrade premium isn't lost, it becomes part of the property's improved cost basis for CGT). Key exclusions: Rent-a-Room properties (different scheme); previously FHL properties (but post-April 2025 FHL abolition brings ex-FHLs back into scope). The relief applies to all residential property letting, sole-trader landlords, partnerships, Ltd Co landlords. Most landlords find Replacement of Domestic Items combined with Section 24 mortgage interest credit (for individuals) + Property Allowance (for very small income) is the structural framework for current residential rental property tax planning.

How it works

Replacement only, initial fit-out excluded

Only the REPLACEMENT of existing domestic items in furnished residential lettings qualifies. Initial furnishing at first letting NOT deductible, becomes part of property cost basis for CGT. Once operational + items wear out / need replacing, replacements ARE deductible.

Like-for-like replacement cost + disposal costs

Deduction = (cost of new replacement item) + (disposal costs of old item) - (proceeds from selling old item). Like-for-like means equivalent quality + functionality, not identical product. £400 old sofa → £450 new equivalent sofa = £450 deduction; if sold old sofa for £20 = £430 net deduction.

Upgrade portion capped at like-for-like equivalent

Replacing with a SIGNIFICANTLY BETTER item: deduction capped at the LIKE-FOR-LIKE equivalent cost. Excess upgrade premium DISALLOWED + treated as capital improvement (adds to property cost basis for CGT). £400 old sofa replaced with £1,200 upgrade: deduction £500 (like-for-like equivalent); £700 upgrade premium disallowed annually but adds to CGT cost basis.

Qualifying items list

Furniture: sofas, beds, tables, chairs, wardrobes. White goods: fridges, washing machines, dishwashers, microwaves, dryers, hobs, ovens. Soft furnishings: carpets, curtains, blinds. Crockery + cutlery. Smaller household items: kettles, toasters, lamps. NOT covered: structural items (boilers, kitchen units when fitted, bathroom suites, these are part of the property fabric, not domestic items). Property structure items go via main pool / SBA / Section 24 mechanics depending on classification.

Who qualifies

Residential property letting business (sole trader, partnership, Ltd Co)
REPLACEMENT of existing domestic items (initial fit-out excluded)
Like-for-like replacement (or upgrade portion capped at like-for-like)
Capital allowances NOT claimed on same expenditure (mutually exclusive)
Not a Rent-a-Room property (Rent-a-Room threshold applies instead)
From 6 April 2025: former FHL properties now eligible (FHL abolition)

Interactions with other reliefs

Section 24 Mortgage Interest Restriction

Section 24 restricts MORTGAGE INTEREST (20% basic-rate credit). Replacement of Domestic Items is a separate FURNITURE deduction. Both apply to residential letting but don't interfere with each other, they cover different cost types.

FHL Abolition (from April 2025)

Pre-April 2025: FHLs claimed capital allowances on furniture (AIA + WDA). Post-April 2025: ex-FHLs use Replacement of Domestic Items instead, less generous (no initial fit-out, replacement only) but maintains some ongoing furniture relief. Transitional rules preserve pre-April 2025 capital allowance pools.

Property Allowance (£1,000)

Property Allowance vs actual expenses (including Replacement of Domestic Items), mutually exclusive election. Below £1,000 gross rental: usually Property Allowance wins. Above £1,000 with significant Replacement of Domestic Items + other costs: actual expenses route wins.

Rent-a-Room

Rent-a-Room scheme uses £7,500 threshold + EXCLUDES Replacement of Domestic Items entirely. Main-home lodger landlords either claim Rent-a-Room (no separate deductions) OR opt out + claim actual expenses (including Replacement of Domestic Items).

Common mistakes + audit triggers

Claiming initial fit-out costs when property first let (excluded, only replacements qualify)
Claiming full upgrade cost without restricting to like-for-like equivalent (excess disallowed)
Treating structural items (kitchen units, boilers, bathroom suites) as domestic items (they're property fabric)
Claiming Replacement of Domestic Items + capital allowances on same expenditure (mutually exclusive)
Forgetting to deduct proceeds from selling the old item (deduction is NET of old-item proceeds)
Claiming on Rent-a-Room property (excluded, Rent-a-Room threshold mechanic instead)
Mishandling FHL transitional rules (pre-April 2025 capital allowance pools continue under WDA; new acquisitions use Replacement of Domestic Items)

Worked example

Krishnan, Leeds - Landlord with two furnished BTL properties, replacing worn items 2025/26 (2025/26)

Krishnan owns 2 BTL properties in Leeds, both furnished + let to tenants. 2025/26 replacements: Property A: replaced sofa (£420 cost + £15 disposal; old sold for £30), like-for-like; replaced washing machine (£380 cost; old discarded - skip cost £25, no resale proceeds), like-for-like. Property B: replaced living-room carpet (£800 new; old skipped £40), like-for-like; UPGRADED bedroom mattress from £200-equivalent to £600 mattress.

Calculation: **Property A:** - Sofa: £420 + £15 disposal - £30 old proceeds = **£405 deduction** - Washing machine: £380 + £25 skip - £0 = **£405 deduction** - Property A total: £810 **Property B:** - Carpet: £800 + £40 skip - £0 = **£840 deduction** - Bedroom mattress upgrade: like-for-like equivalent £220. Capped at £220 deduction; £380 upgrade premium DISALLOWED annually but adds to property cost basis for CGT. - Property B total: £840 + £220 = £1,060 **Combined 2025/26 Replacement of Domestic Items deduction: £1,870.** **Tax saving:** Krishnan is higher-rate landlord (combined PAYE + rental). £1,870 × 40% = **£748 income tax saved**. **Strategic note on mattress upgrade:** The £380 upgrade premium isn't deductible annually but becomes part of Property B's cost basis. On eventual sale, the upgrade reduces taxable gain. For higher-rate taxpayer landlord: - Annual relief: £748 (£1,870 deduction × 40%) - Future CGT relief on £380 upgrade: 24% × £380 = £91 (when property sold) - Combined value: £748 + £91 = £839 of relief on £1,640 + £380 = £2,020 of total spending → ~41% effective recovery rate. **FHL transition note:** If either property were a former FHL pre-April 2025, the transition mechanic preserves any historic capital allowance pools (continued WDA) but new furniture acquisitions from April 2025 use Replacement of Domestic Items. Both properties in Krishnan's scenario are ordinary residential lets, standard mechanic applies.

Statute reference: Income Tax (Trading and Other Income) Act 2005 ss.311-311E. HMRC manual: PIM3210 onwards.

Frequently asked questions

What happens if I miss the Self Assessment deadline?+

The Self Assessment deadline is 31 January (online filing) for the previous tax year. Miss it and HMRC apply an automatic £100 penalty. Beyond that: £10 per day from 3 months late (capped at £900), 5% of tax due at 6 months late, and another 5% at 12 months late, under Schedule 55 of the Taxes Management Act 1970. If you have a genuine reason (serious illness, bereavement, technical issue with HMRC's systems) you can appeal with evidence; HMRC accepts reasonable excuse appeals in most genuine cases.

Do I need an accountant or can I file Self Assessment myself?+

Legally you can file Self Assessment yourself via gov.uk for free, most simple sole-trader returns (single income source, basic expenses) are realistic to self-file. An accountant adds real value when: your trading profit is above £40,000 (extraction-strategy decisions matter), you have multiple income streams (PAYE + self-employment + property + dividends), you've crossed the £90,000 VAT threshold, you're considering incorporation, or you have an HMRC enquiry. Expect to pay £400-£1,500/year for a typical sole-trader accountant; the cost is itself a deductible expense.

How do payments on account work?+

When your Self Assessment tax bill exceeds £1,000 for the first time, HMRC requires payments on account toward NEXT year's tax. Half the current bill is due 31 January (alongside the current bill); the other half is due 31 July. So your first January after crossing the threshold can hit with a double-bill: last year's balance + first payment on account. Adjust via Form SA303 if you expect next year's income to drop substantially. Payments on account don't apply if more than 80% of your tax is collected via PAYE.

I just bought a buy-to-let + need to furnish it, can I claim the furniture cost?+

No, INITIAL FIT-OUT when a property is FIRST LET does NOT qualify. Replacement of Domestic Items applies only to REPLACING existing items, not to the original furnishing. Initial fit-out costs become part of the property's capital cost basis (relevant for eventual CGT calculation on sale, not for annual deductions). Once the property is operationally let, subsequent replacements (e.g. replacing the sofa that wore out, replacing the washing machine that broke) ARE deductible under the relief. The first-let exclusion is the most common surprise for new landlords, many expect to deduct the £4,000-£8,000 initial furnishing cost in the first tax year.

I'm replacing a £400 IKEA sofa with a £1,200 leather sofa, can I claim the full £1,200?+

No, UPGRADE PORTION is capped at the equivalent like-for-like replacement cost. The like-for-like equivalent of the £400 IKEA sofa is approximately £500 (current price of a similar IKEA sofa in 2025). You can deduct £500 (the like-for-like replacement cost) + disposal costs (e.g. £30 to scrap the old sofa); the additional £700 upgrade premium is DISALLOWED + treated as a capital improvement (part of the property's cost basis for CGT). Strategy: when replacing furniture, document the like-for-like equivalent price at time of purchase to support the deduction; the upgrade portion isn't lost forever (it reduces eventual CGT on sale), but it's not deductible annually.

My ex-FHL is now an ordinary residential let, can I claim Replacement of Domestic Items?+

Yes, from 6 April 2025 (FHL abolition), former FHL properties moved into the ordinary residential property business + are now WITHIN Replacement of Domestic Items scope. Pre-April 2025: FHLs claimed capital allowances on furniture (AIA + WDA) instead of Replacement of Domestic Items. Post-April 2025: capital allowances on EXISTING furniture pools continue under transitional rules (preserved); NEW replacement furniture acquisitions use Replacement of Domestic Items mechanic. The shift is less generous than full capital allowances (which gave 100% AIA in year 1 vs Replacement of Domestic Items only on replacements, not initial fit-out), but maintains some relief for ongoing furniture replacement.

Does Replacement of Domestic Items apply to my Rent-a-Room main-home letting?+

No, Rent-a-Room properties are EXPLICITLY EXCLUDED from Replacement of Domestic Items. Under Rent-a-Room scheme, the £7,500 threshold is the only allowance + actual costs (including furniture replacement) aren't separately deductible. If you OPT OUT of Rent-a-Room + claim actual expenses on main-home letting, then standard residential letting rules apply, Replacement of Domestic Items becomes available. But opt-out only makes sense if actual expenses exceed £7,500, rare for typical lodger arrangements.

Last reviewed: 23 May 2026