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  • FIRST POST
    • thenap80
    • By thenap80 7th Jul 17, 5:25 PM
    • 303Posts
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    thenap80
    LANDLORD TAX ALLOWANCES - is this allowed ...?
    • #1
    • 7th Jul 17, 5:25 PM
    LANDLORD TAX ALLOWANCES - is this allowed ...? 7th Jul 17 at 5:25 PM
    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
Page 1
    • G_M
    • By G_M 7th Jul 17, 5:35 PM
    • 41,885 Posts
    • 48,473 Thanks
    G_M
    • #2
    • 7th Jul 17, 5:35 PM
    • #2
    • 7th Jul 17, 5:35 PM
    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.
    Last edited by G_M; 07-07-2017 at 5:38 PM.
    • thenap80
    • By thenap80 7th Jul 17, 5:43 PM
    • 303 Posts
    • 11 Thanks
    thenap80
    • #3
    • 7th Jul 17, 5:43 PM
    • #3
    • 7th Jul 17, 5:43 PM
    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!
    • thenap80
    • By thenap80 7th Jul 17, 5:45 PM
    • 303 Posts
    • 11 Thanks
    thenap80
    • #4
    • 7th Jul 17, 5:45 PM
    • #4
    • 7th Jul 17, 5:45 PM
    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! ?
    • G_M
    • By G_M 7th Jul 17, 5:56 PM
    • 41,885 Posts
    • 48,473 Thanks
    G_M
    • #5
    • 7th Jul 17, 5:56 PM
    • #5
    • 7th Jul 17, 5:56 PM
    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 claimable
    • 00ec25
    • By 00ec25 7th Jul 17, 5:56 PM
    • 5,326 Posts
    • 4,683 Thanks
    00ec25
    • #6
    • 7th Jul 17, 5:56 PM
    • #6
    • 7th Jul 17, 5:56 PM
    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!
    Originally posted by thenap80
    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.

    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!

    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! ?
    Originally posted by thenap80
    I thought you said you had read the PIM?

    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...

    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)
    Originally posted by thenap80
    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 expenditure

    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.
    Last edited by 00ec25; 07-07-2017 at 6:12 PM.
    • theartfullodger
    • By theartfullodger 7th Jul 17, 5:59 PM
    • 9,041 Posts
    • 11,963 Thanks
    theartfullodger
    • #7
    • 7th Jul 17, 5:59 PM
    • #7
    • 7th Jul 17, 5:59 PM
    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...
    • thenap80
    • By thenap80 7th Jul 17, 6:04 PM
    • 303 Posts
    • 11 Thanks
    thenap80
    • #8
    • 7th Jul 17, 6:04 PM
    • #8
    • 7th Jul 17, 6:04 PM
    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...
    Originally posted by theartfullodger
    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!
    • thenap80
    • By thenap80 7th Jul 17, 6:17 PM
    • 303 Posts
    • 11 Thanks
    thenap80
    • #9
    • 7th Jul 17, 6:17 PM
    • #9
    • 7th Jul 17, 6:17 PM
    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.
    • 00ec25
    • By 00ec25 7th Jul 17, 6:23 PM
    • 5,326 Posts
    • 4,683 Thanks
    00ec25
    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.
    Originally posted by thenap80
    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 answers
    • Pennywise
    • By Pennywise 7th Jul 17, 6:34 PM
    • 9,320 Posts
    • 16,914 Thanks
    Pennywise
    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.
    Originally posted by 00ec25
    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-businesses
    • 00ec25
    • By 00ec25 7th Jul 17, 7:43 PM
    • 5,326 Posts
    • 4,683 Thanks
    00ec25
    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-businesses
    Originally posted by Pennywise
    yes, although OP is asking about 16/17's return and, as we know, the HMRC manuals cover the "current" tax year's rules rather than issues useful for tax planning going forward
    • theartfullodger
    • By theartfullodger 7th Jul 17, 7:52 PM
    • 9,041 Posts
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    theartfullodger
    Thank you for your kind words....
    And is this your book you are promoting?...
    Originally posted by thenap80
    Nope, not me, instead a Mr Carl Bayley. But I did hear him speak at a Landlord conference (I try to keep myself informed: Trust me, it's cheaper than ignorance.)..., have bought the book - more than once, the law keeps changing, and saved money...
    .... Pretty sure there are not TEN taxes I have to pay.
    I said MAY have to pay: We got well over 10 here...
    http://www.landlordzone.co.uk/forums/showthread.php?49095-How-many-taxes-can-a-landlord-have-to-pay
    - I submit you will need to pay CGT (when selling), VAT on many purchased items, insurance tax on insurance cover, council tax on voids (especially that 1-day at tenancy changeover etc etc etc...
    .....Income tax is all I am worried about here!
    If you read that book (or at least one other..) you'll find worrying about income only may mean you pay more overall... but, please, feel free, try ignorance....

    When I started as a landlord 16+ years ago I made expensive, painful, long-drawn-out mistakes. Then I decided to get informed: I'm still learning, still male mistakes (well, I am an OaP... - on 6 benefits..) but still try to learn... Think about it!

    Best wishes to all
    • Crashy Time
    • By Crashy Time 7th Jul 17, 8:01 PM
    • 5,225 Posts
    • 2,204 Thanks
    Crashy Time
    So you could make no profit and still be taxed?
    • thenap80
    • By thenap80 9th Jul 17, 6:19 PM
    • 303 Posts
    • 11 Thanks
    thenap80
    Having read the links above, I find that you can claim at least £10 for a month where u work on the landlord property business for over 25hrs. I can'tr say I spend 25 hrs a month on it at all but lets say for example 4 on average. Am I just to guess a portion of the £10 as the table shown on HMRC only begins at 25+ hours but says I need to work out if less. How do you work out such a subjective figure when not using the simplified counting rule.????
    • theartfullodger
    • By theartfullodger 9th Jul 17, 6:21 PM
    • 9,041 Posts
    • 11,963 Thanks
    theartfullodger
    Having read the links above, I find that you can claim at least £10 for a month where u work on the landlord property business for over 25hrs. I can'tr say I spend 25 hrs a month on it at all but lets say for example 4 on average. Am I just to guess a portion of the £10 as the table shown on HMRC only begins at 25+ hours but says I need to work out if less. How do you work out such a subjective figure when not using the simplified counting rule.????
    Originally posted by thenap80
    Which part of
    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...
    - was unclear, please?

    Best regards
    • thenap80
    • By thenap80 9th Jul 17, 6:47 PM
    • 303 Posts
    • 11 Thanks
    thenap80
    Which part of - was unclear, please?

    Best regards
    Originally posted by theartfullodger
    Definitely promoting that book. The idea of coming on here was so I don'y have to buy a book for £25 and sifting through 200pages waiting to find the answer!

    Thanks though! Had some really good advice and became more knowledgeable on certain terminology like Cash Basis and Simple Counting Rules.

    I have read that probably not worth claiming for office in home so may just leave it anyway.
    • 00ec25
    • By 00ec25 9th Jul 17, 9:46 PM
    • 5,326 Posts
    • 4,683 Thanks
    00ec25
    Thanks though! Had some really good advice and became more knowledgeable on certain terminology like Cash Basis and Simple Counting Rules..
    Originally posted by thenap80
    you may like to re-phrase that statement, knowledge assumes you understand what you have just read. What are the "simple counting rules"?

    if you cannot be bothered to read 200 pages and instead expect your tax position to be handed to you on a plate for free by other people, then Good Luck!
    Last edited by 00ec25; 09-07-2017 at 9:50 PM.
    • thenap80
    • By thenap80 9th Jul 17, 10:06 PM
    • 303 Posts
    • 11 Thanks
    thenap80
    Simplified Expenses! You know what I meant!
    • butters_86
    • By butters_86 10th Jul 17, 9:30 AM
    • 15 Posts
    • 2 Thanks
    butters_86
    Just use an accountant, my partner and I have several properties between us. We prepare 3 sets of accounts: me as a sole trader for 1 property, my partner as a sole trader for 1 property and then a LTD company for 3 properties between us. We are charged £600 for all 3 to be prepared. This includes tax and financial advice whenever needed.

    £600 is worth paying for taking the hassle out of it, we turn up to our annual appointment, drop off all our receipts and income details and they do the rest. A month later we receive our accounts and pay our tax bill. Just do the same, you will be thankful that you did
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