Capital Allowances for Landlords Explained (2026)
Last updated 27 June 2026 · 8 min read · By the LandlordTaxAi Editorial Team
The short answer
For residential lets, generally no. Capital allowances are not available for plant in a dwelling-house. Instead, residential landlords use replacement of domestic items relief for like-for-like replacements of furniture and appliances. Capital allowances can still apply to assets outside a dwelling — common-parts plant, genuine business equipment — and remain important for commercial property.
Capital allowances are a common source of confusion for landlords, partly because the rules differ sharply between residential and commercial property. This guide explains the dwelling-house exclusion, the relief you use instead, and the narrower cases where allowances still apply.
See also replacement of domestic items relief and the FHL abolition.
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Rental Profit Calculator
For residential lets, claim replacement relief rather than capital allowances — see the effect on profit.
Result
- Taxable profit (rent − expenses)
- £11,200
- Income Tax at 20%
- £2,240
- Less mortgage interest credit (20%)
- − £1,000
- Tax due on this property
- £1,240
- Income after tax
- £9,960
Residential dwellings: no capital allowances on plant; use replacement of domestic items relief. Estimate only.
The dwelling-house exclusion
The core rule: you cannot claim capital allowances on plant and machinery used in a dwelling-house let residentially. That blocks allowances on things like furniture, white goods and fittings inside the rented home. The relief designed to fill the gap is replacement of domestic items relief.
For the typical residential landlord, "capital allowances" usually isn’t the right answer — replacement relief is.
Replacement of domestic items relief
This relief deducts the cost of replacing domestic items in a residential let — furniture, carpets, curtains, white goods and similar — on a like-for-like basis, net of any proceeds from the old item. Crucially, it covers replacements, not the first purchase: kitting out a property for the first time isn’t relieved this way.
| Item / cost | Residential treatment |
|---|---|
| Plant/furniture in the dwelling | No capital allowances |
| Replacing a worn sofa/fridge like-for-like | Replacement of domestic items relief |
| First-ever purchase of an item | Not relieved (no relief on first buy) |
| Plant in common parts of a block | Capital allowances may apply |
| Genuine business equipment (not in dwelling) | Capital allowances may apply |
Since the FHL regime was abolished from April 2025, former holiday-let landlords also lose capital allowances on new domestic items and rely on replacement relief like everyone else.
Where allowances still apply
Capital allowances aren’t dead for landlords — they just don’t reach inside the dwelling. Plant and machinery in the common parts of a block, or genuine business assets used to run the lettings (certain equipment, tools), can still qualify. And for commercial property, capital allowances on qualifying building plant remain a major relief.
Claim the right relief, correctly
LandlordTaxAi reads your bank statements and helps categorise costs — including replacement of domestic items — against the right HMRC category, keeping your MTD records accurate.
See how it worksA worked example
A residential landlord replaces a broken washing machine for 2026/27.
| New washing machine | £400 |
| Proceeds from old machine | £20 |
| Replacement relief claimed | £380 (not capital allowances) |
| First-time purchase instead | No relief on first buy |
The replacement is relieved net of proceeds; a first purchase wouldn’t be — and neither route is a capital allowance.
Frequently asked questions
Can landlords claim capital allowances on residential property?
Generally no — not for plant in a dwelling-house. Residential landlords use replacement of domestic items relief instead.
What is replacement of domestic items relief?
A deduction for replacing domestic items like-for-like, net of proceeds. It covers replacements, not the first purchase.
When can a landlord still claim capital allowances?
For plant not within a dwelling — common-parts plant, or genuine business equipment used to run the lettings.
Did the rules change with the FHL abolition?
Yes — from April 2025 former FHL landlords can no longer claim capital allowances on new domestic items and use replacement relief.
What about commercial property?
Capital allowances are much more relevant there — qualifying plant in the building can attract allowances. The dwelling-house limit is residential-specific.
How does this affect my MTD records?
Most residential landlords record replacement relief, not capital allowances. Keep records of what was replaced and any proceeds.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 27 June 2026 · Researched against primary UK sources for the 2026/27 tax year: https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income; https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim3210. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.