Replacement of Domestic Items Relief: 2026/27 Guide

Replacement of Domestic Items Relief lets residential landlords deduct qualifying costs when they replace furniture, furnishings, appliances or kitchenware supplied for a tenant. It applies to replacements—not the first purchase—and the deduction can be restricted when the new item is an upgrade.

For 2026/27, this relief is especially important because the former Furnished Holiday Lettings capital-allowance regime has ended. The same core replacement rules can now apply to qualifying residential property businesses, including former holiday lets.

What items can qualify?

• movable furniture such as beds, tables, chairs and freestanding wardrobes;
• furnishings such as carpets, curtains, blinds and linen;
• household appliances such as fridges, freezers, televisions and washing machines;
• kitchenware such as crockery, cutlery and utensils.

The item must be provided for the tenant’s use in a dwelling house. Fixtures that become part of the building—such as baths, fitted sanitaryware, boilers and built-in heating systems—are normally considered under the repairs or capital-expenditure rules instead.

The five conditions to check

1. You carry on a property business that includes letting a dwelling house.
2. An old domestic item was provided for use in that property.
3. You buy a new domestic item to replace it.
4. The old item is no longer available for the tenant’s use.
5. The cost is incurred wholly and exclusively for the property business.

A repair to an existing appliance is normally considered under the repairs rules. Replacement relief is relevant when the item itself is replaced.

Initial purchases do not qualify

The cost of furnishing a previously empty rental property for the first time is not covered. If a landlord buys the first sofa, bed and fridge for a new letting, there is no “old item” being replaced. Keep the first-purchase invoices: they establish what existed and can support a later replacement claim.

How to calculate the deduction

The starting formula is:

Cost of an equivalent replacement + qualifying incidental costs − disposal proceeds or part-exchange value.

Incidental costs can include delivery of the new item and disposal of the old one. If the replacement is an improvement, use the lower cost of a reasonable modern equivalent rather than the full upgraded price.

Worked examples

Like-for-like replacement

A landlord replaces a broken fridge with a similar modern model for £550, pays £25 delivery and £20 to remove the old fridge. Nothing is received for it. The potential deduction is £595.

Upgrade

An old single bed is replaced by a £500 double divan. A modern equivalent single bed would cost £180, delivery is £25 and the old bed is sold for £30. The potential deduction is £175: £180 + £25 − £30. The extra cost of the upgrade is excluded.

Modern technology is not automatically an upgrade

A replacement fridge with a better energy-efficiency rating can still be a reasonable modern equivalent where older technology is no longer normally available. The test is whether functionality, quality or material has been substantially improved—not whether the model is newer.

Small, short-life items

Low-value items such as crockery, cutlery, cushions and bed linen that are replaced regularly may be allowable under the ordinary expenses rules. Record them consistently and avoid claiming the same cost twice.

Property allowance interaction

You cannot claim Replacement of Domestic Items Relief for a tax year in which you use the £1,000 property allowance against the same property-business income. Compare the allowance with your actual qualifying costs before choosing. See our 2026/27 property allowance guide.

Rent a Room and non-commercial letting

Expenses cannot be deducted when income is exempt under the Rent a Room basis. If you opt for normal profit calculation instead, the ordinary rules may apply. Relief can also be restricted where property is let below commercial rent or an item has private use, because the wholly-and-exclusively condition may fail.

Read our Rent a Room Scheme guide before comparing methods.

Former furnished holiday lets

The special FHL tax regime was abolished from April 2025. New expenditure no longer receives the old FHL capital-allowance treatment merely because accommodation is let to holidaymakers. Replacement domestic items relief may apply under the ordinary residential property rules, subject to its conditions and transitional treatment for existing capital-allowance pools.

Records to retain

• the original and replacement purchase invoices;
• delivery, installation and disposal invoices;
• evidence of sale or part exchange of the old item;
• photographs or inventory reports identifying both items;
• a note explaining any upgrade and the cost of a reasonable equivalent;
• tenancy documents showing the item was supplied for tenant use.

Keep a separate repairs and replacements schedule. Our allowable expenses versus capital costs guide helps classify wider property work.

Common mistakes

• claiming the initial cost of furnishing a property;
• deducting the full price of a substantial upgrade;
• forgetting disposal proceeds or part-exchange credit;
• claiming an expense as well as the property allowance;
• treating a fixed part of the building as a domestic item;
• failing to remove private-use or non-commercial elements.

Official guidance

• GOV.UK: working out rental income and replacement relief
• HMRC replacement-relief examples
• HMRC Property Income Manual: furnished lettings

This 2026/27 article provides general information, not personal tax advice.