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thenap80
Posts: 421 Forumite
Quick Q...
I started letting my property in June 2016. Therefore in the process of completing Tax Return Self !!!.
In about February 2016 - so before the start of 16/17 tax year, I got my property ready for renting while I still lived there. Are these costs of getting it ready tax deductible allowances. One included a payment to the council for a Landlord License! A hefty 500pounds. Another was getting the fences in back garden replaced. (Although I feel I have lost receipt for the fences so that may have to be a no no)
Also, how exact are HMRC with figures? Very I assume. But if I started letting out on 27th June - do I then need to calc the exact rental income by that - bearing in mind each month has differing no. of days!
Thanks
I started letting my property in June 2016. Therefore in the process of completing Tax Return Self !!!.
In about February 2016 - so before the start of 16/17 tax year, I got my property ready for renting while I still lived there. Are these costs of getting it ready tax deductible allowances. One included a payment to the council for a Landlord License! A hefty 500pounds. Another was getting the fences in back garden replaced. (Although I feel I have lost receipt for the fences so that may have to be a no no)
Also, how exact are HMRC with figures? Very I assume. But if I started letting out on 27th June - do I then need to calc the exact rental income by that - bearing in mind each month has differing no. of days!
Thanks
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Comments
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Have you read:
https://www.gov.uk/renting-out-a-property/paying-tax
Or for more in-depth detail:
https://www.gov.uk/hmrc-internal-manuals/property-income-manual
Yes of course it must be exact. The number ofdays in a month is irrelevant. It's the amunt of rent you've received that matters.0 -
Yes I have read them but appear grey. Not definitive.
Also then, one that I can't find answer to...does the deposit count as income since I took it and placed it straight into DPS.
Toughie!0 -
Okay so for final month of March where I get paid on the 27th....I will count the whole months pay (which includes alot of April) as being as one chunk to include on same tax year! ?0
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Yes. You received that money in the 2016/17 tax year (or whichever)
No the deposit is not income - it's not your money and you must return it later!
Your LL licence is clearly an expense of the business so claimable.
the fence sounds like a capital improvement so not claimable0 -
a deposit is not income, it is money you ultimately owe to your tenant (so a creditor) but in the meantime hold as a deposit (so an asset). as such the asset and the creditor balance and would appear on a balance sheet not on a profit and loss account as it is not income which you can spend.Yes I have read them but appear grey. Not definitive.
Also then, one that I can't find answer to...does the deposit count as income since I took it and placed it straight into DPS.
Toughie!
if, eventually, you claim part of the deposit as deduction when the tenant terminates, then, and only then, would the deductions become income (and may, or may not, be offset by the expense of the actual repair - if one is done!
I thought you said you had read the PIM?Okay so for final month of March where I get paid on the 27th....I will count the whole months pay (which includes alot of April) as being as one chunk to include on same tax year! ?
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1101
Receipts are recognised in accordance with normal accountancy principles. This means that a taxpayer includes all incomings earned in the tax year regardless of when they are due or when they are received.
if you read the rest of that section you will then understand how to do it and, perhaps more importantly, when you don't have to do it that way...
that would be classed as pre commencement expenditure...must be incurred wholly and exclusively for the purposes of the rental business and must not be capital expenditureAnother was getting the fences in back garden replaced. (Although I feel I have lost receipt for the fences so that may have to be a no no)
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2505
as with everything on your SELF assessment tax return, what you choose to declare is down to your attitude to whether you will be "lucky" enough to be subject to a random inspection. At which point you will need to be able to support everything you claimed by producing paperwork to show what it was. naturally a tax inspector will make allowances for the odd small item, but a claim for hundreds of £ for "fences" without a receipt may not fall into such soft viewpoint.0 -
There are more than 10 taxes a landlord may have to pay: Don't just worry about income tax!
Buy a book on property tax e.g.
https://www.amazon.co.uk/How-Save-Property-Tax-2016/dp/1911020110
- it will save you more than it costs...0 -
theartfullodger wrote: »There are more than 10 taxes a landlord may have to pay: Don't just worry about income tax!
Buy a book on property tax e.g.
https://www.amazon.co.uk/How-Save-Property-Tax-2016/dp/1911020110
- it will save you more than it costs...
And is this your book you are promoting? Pretty sure there are not TEN taxes I have to pay. Income tax is all I am worried about here!0 -
What is the deal with the £4/month allowed for using home as an office. I don't let through an agen and do it myself. Can I claim this as standard or is there an algorithm for working it out. I'd obvioulsy like to claim this if I can.
And the claim for visiting my property - 45p/mile! What if someone else drives me or if I got the train. It is 20 miles a way.0 -
sorry but if you want someone to do your tax return for you whilst teaching you the basics of tax then go pay an accountant, instead of asking 1001 questions looking for free answersWhat is the deal with the £4/month allowed for using home as an office. I don't let through an agen and do it myself. Can I claim this as standard or is there an algorithm for working it out. I'd obvioulsy like to claim this if I can.
And the claim for visiting my property - 45p/mile! What if someone else drives me or if I got the train. It is 20 miles a way.0 -
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1101
Receipts are recognised in accordance with normal accountancy principles. This means that a taxpayer includes all incomings earned in the tax year regardless of when they are due or when they are received.
From 6/4/17, the default is cash basis for property letting and you have to elect to use the traditional/accruals basis.
https://www.gov.uk/government/publications/calculation-of-profits-of-property-businesses/income-tax-simplified-cash-basis-for-unincorporated-property-businesses0
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