Furniture removals

My very wealthy client rents one of his apartments on an unfurnished basis to a good friend for £2 500 per month. My client has a very responsible attitude to his tax but hates to miss out on any allowances. He has got his eye on the 10% wear and tear allowance that can be claimed against rental income if a property is furnished.

He has made a suggestion that he buys the furniture in the flat from his friend for £1 800 — payable in three annual instalments of £600 each. At the end of the three years the furniture will be considered to be worthless so the friend will make a final payment of £1 to reclaim ownership of all the items again.

The end result is that my client saves £1 200 of tax per year (£30 000 rental income x 10% wear and tear...