Late December, a twenty-two-room hotel in a provincial town. Installation for the renewal wrapped up on the 18th, the rooms are usable, the balance has been paid. The hotelier is holding an invoice with a single line, “furniture supply for rooms”, and calls the accountant convinced they’ve just written off a cost.
The answer is that the cost will be deducted over several financial years, that the items on that single line probably don’t all belong to the same asset category, and that a document showing the date the asset entered service is needed. That phone call tells you the whole mechanism, and the right time to make it is before signing the order.
A premise that holds for every line below: producing contract furniture has been our trade for over fifty years, tax advice hasn’t. Coefficients, thresholds, percentages and applicable timeframes for your specific case need checking by your accountant against the table in force for the relevant year. What follows explains the mechanisms and the documents to obtain.
Contents
Why the deduction spreads over several financial years
In everyday language, “what does it cost me” means what leaves the bank account; on a tax return it means something else, and the two figures don’t match in the same financial year. A renewal paid in a deposit and balance over a few months produces a concentrated outflow, while the deduction spreads out, because that furniture consists of durable capital assets: it will generate revenue for years, and tax logic wants the cost to follow the revenue. The practical result is one year with a high outlay and only a partial benefit, followed by years with a benefit and no outlay.
Two concrete consequences follow. A cash plan and a tax plan are different documents, and it’s this gap that creates interest in leasing and operating rental, which move the cost onto the profit and loss account without tying up cash. The second is that the timing of the order matters: a supply that enters service in December and one that enters service in January fall into different financial years. This is a choice to discuss with your adviser before signing, especially when the works straddle the year-end.
Tax depreciation isn’t decided by estimating how long a wardrobe will last. A ministerial table assigns each category of asset a maximum deductible share per financial year, and it’s organised by groups and types of business activity: the same piece of furniture falls under different coefficients depending on the sector it works in, because real wear and tear varies.
Two useful points follow, even without citing figures. Hospitality businesses have their own entry, and it isn’t used by analogy with an office or a shop: it’s a check an accountant makes in five minutes, and the one a hotelier gets wrong reading a forum. Within the same business, moreover, assets don’t all sit on the same line: furniture and fittings, electronic equipment, systems, linen and small equipment are separate classifications.
Invoicing a room renewal by separate line items
This is where the December scene becomes useful again. Inside “furniture supply for rooms” there was bespoke furniture, mattresses, light fittings, televisions and fabrics: items with different lifespans and potentially different categories. An accountant handed a single line can only ask for clarification months later or make an approximate allocation, which then stays approximate for the whole life of the depreciation schedule.
The practical rule concerns the supplier directly: the more the invoice and specification break items down, the more precise the classification. An invoice that separates fixed furniture, freestanding furniture, upholstered items, lighting, equipment and installation work gives the accountant everything they need. Anyone starting off on the right foot asks for a quote already broken down by item, dimensions and quantity, because that same document becomes the basis for the invoice.
Capital asset or maintenance: the distinction that decides the deduction
This is the most common source of confusion, and the one with the biggest impact.
A capital asset is a new item that joins the business’s assets and gets entered in the depreciable assets register: a wardrobe, a bed, an armchair, a reception desk. Its cost is deducted in instalments. Routine maintenance spending, by contrast, keeps an existing asset in working order without increasing its capacity or extending its useful life: adjusting doors, replacing a hinge, polishing a worktop. It follows its own deductibility rules, with limits your adviser sets out case by case.
The grey area sits in between, and it’s work that improves the asset rather than just preserving it: reupholstering twenty armchairs in a higher-performance fabric, redoing the fronts on every wardrobe, replacing worktops with a more resistant material. This kind of work is often capitalised, meaning treated as an increase in the asset’s value and depreciated, rather than deducted as a current expense.
What matters to the hotelier is that the real nature of the work counts, not its amount. If the document says “furniture maintenance” but elements were fully replaced with others of superior specification, the accountant is working from a description that doesn’t match the facts, and in the event of an audit the specification tells the true story. On refurbishments, the question to ask the supplier is how the work will be described, and the answer needs agreeing with your adviser before ordering.
| Typical hotel situation | Most common treatment | What the adviser needs |
|---|---|---|
| Complete supply of new rooms | capital asset to be depreciated | specification broken down by item, date of entry into service |
| Replacing a hinge or a handle | routine maintenance | description of the work and list of parts |
| Full reupholstering of the lobby’s upholstered furniture | assessed case by case, often capitalised | technical description of the state before and after |
| Purchase of a few low unit-cost accessories | possible full deduction in the year | invoice with quantity and unit price per item |
| Works on a rented property | expenditure on third-party assets | lease agreement, removable or non-removable nature |
The middle column shows the most common treatment, not an automatic rule: every line needs confirming by your adviser against the actual case.
Full deduction of low unit-cost assets
Legislation allows capital assets whose unit cost stays under a certain threshold to be deducted in full in the year, without opening a depreciation schedule. In a hotel this simplification matters, because hospitality is full of low-cost items in large quantities: luggage racks, coat stands, mirrors, waste baskets, table lamps, stools.
Two practical warnings, leaving the current threshold to your adviser. The reference is the unit cost of each individual item, not the total value of the supply: thirty luggage racks are thirty assets, and proving it needs an invoice with quantity and unit price. Deducting immediately, moreover, isn’t automatically advantageous: it depends on the year’s results and any prior losses, so it’s an assessment to make against the accounts.
When depreciation starts: the asset entering service
In the year the asset enters service, the allowed share is reduced compared with a full year, because the asset hasn’t been in use for the whole period. This is something that surprises many hoteliers: the real length of the depreciation schedule is longer than the simple ratio between cost and coefficient, because the portion not deducted at the start gets recovered at the end. What matters is the date the asset enters service, not the invoice date and not the order date, and on a hotel site this usually coincides with the end of installation and the room becoming available for use. That’s why a dated installation completion record matters beyond the building site itself: in the December scene, the difference between 18 December and the first days of January came down entirely to a signed sheet of paper. If the works proceed by wing or by floor, the date needs recording for each batch made usable.
Furniture in a rented hotel: movable assets and non-removable improvements
In Italian hospitality, management and ownership of the property often don’t coincide, and the operator invests in furniture and sometimes in works that remain attached to the building.
Removable movable assets stay theirs: freestanding wardrobes, beds, armchairs, bedside tables, a reception desk not permanently fixed. They get taken apart and removed at the end of the tenancy, and they follow their own rules. Non-removable improvements are a different matter: false ceilings, wall panelling glued in place, bathroom tiling, fitted wardrobes built into a recess and not recoverable. They can’t be separated without destroying them, so at the end of the contract they stay with the property owner, and how the expense is allocated follows its own rules, also linked to the remaining length of the tenancy.
What we can say without stepping into tax territory is that the design decides the asset’s nature. A wardrobe built into a recess, glued and filled, is a non-removable improvement; the same wardrobe made freestanding and fixed with removable brackets stays a movable asset belonging to the operator. The visual result can be almost identical, but the balance-sheet position isn’t. That’s why, on a rented property, the question to ask at survey stage is how many years remain on the lease and whether there’s a renewal option: with five years left and no guaranteed renewal, it’s worth designing for removability, accepting some compromise on finish. After the working drawings are done, all you can do is redo them.
Documentation to keep for depreciation
The schedule runs for years, so the documentation needs to survive changes of management. The files that get complicated are always the ones with documents scattered across three inboxes and a drawer. For each supply, in a single file: an invoice with a detailed description, quantities and unit prices; the technical specification and accepted offer; delivery notes and a dated record of delivery and completion of installation; mandatory certifications, starting with the Class 1 IM approval of upholstered items destined for hospitality businesses, which is also needed for the fire safety application; proof of payment and any finance agreement; the property lease, if the project includes non-removable works.
The same specification is then useful for comparing offers today and for ordering a replacement in the same finish five years from now, and the reasoning extends to budget per room.
Depreciation questions to bring to your accountant
Five questions, and the call wraps up in a quarter of an hour. Which entry on the current table applies to a hospitality business. Do all the specification’s items fall into the same category, or do some need separating. What’s the current threshold for low unit-cost assets, and on this year’s accounts is it better to deduct immediately or depreciate. How are non-removable works on a leased property treated. Given the expected results, does it make sense to bring the supply into service this financial year or the next.
One question, though, needs asking of the supplier, and we welcome it: if the accountant needs a certain level of detail in the quote and the invoice, put it in the quote and the invoice.
Frequently asked questions about depreciating hotel furniture
Over how many years is hotel furniture depreciated?
There’s no single figure that works for everyone. The length depends on the coefficient tied to the type of hospitality business and the asset category, and the reduced first-year share extends it. It needs reading against the table currently in force with your accountant, distinguishing furniture, upholstered items, systems and equipment.
Can I deduct a low-cost piece of furniture immediately?
The rules allow full deduction in the year for capital assets under a certain unit cost, which needs checking against current legislation with your adviser. For the position to be provable, the invoice needs to state the quantity and unit price of each asset, not a single lump sum. Whether it’s advantageous then depends on that year’s accounts.
Is replacing armchair fabrics maintenance or a new asset?
There’s no automatic answer. A conservative intervention on a few pieces tends to be treated as maintenance, while a full reupholstering with higher-performance fabrics is often capitalised. What decides it is the real nature of the work, so it’s worth having your adviser read the specification before signing the order.
I have the hotel on a lease: is the furniture I buy mine?
Movable, removable furniture stays the operator’s asset and gets taken away at the end of the tenancy. Non-removable works, such as glued wall panelling and fitted wardrobes built into a recess, stay with the property owner and follow the rules for expenditure on third-party assets. The difference is decided at design stage, choosing between freestanding furniture and furniture built in place.
Does the invoice date count, or the installation date?
For depreciation to start, the reference is the asset entering service, which on a hotel site usually coincides with the end of installation and the room becoming available for use. That’s why a dated completion record is a document worth insisting on. Confirmation for the specific case, and which financial year the transaction falls into, is down to your accountant.
What happens if I ask for a lump-sum invoice to save time?
You save three minutes and hand your adviser a document that doesn’t allow asset categories to be separated or unit costs to be proven. The allocation becomes approximate and stays that way for the whole life of the schedule. An invoice broken down by item costs nothing beyond asking for it in good time.
