Landlords - allowable expenses

katejo

gailforce wrote: »

katejo wrote: »

It is exactly for these reasons that I stick to the rent a room scheme and keep my rent below £4250. I'm just not comfortable about what I can claim if I switch to completing a tax return.[/QU

I've not looked into that scheme but i presum from the title that it's to do with renting a room in your own home, which isn't applicable as I have a rental flat....unless it would apply to renting the rooms in
the flat?? (2 bed)

Yes you are right. i only mentioned it in the context of things not being clear re. what you can claim.

TrulyMadly

Thank you gailforce and Chrismac1. You have restored my faith in human nature!! Thanks too to the other posters who have sent me links and pms. You are a great bunch.
To be specific. Do you know if you can claim for your own labour. Ie if you fit a gate can you charge say for 2 hours labour to fit it and what would be an acceptable rate of pay. Similar to your point I think gailforce.
What if I buy a laptop can I offset a percentage of the cost as a taxable allowance. Your link chrismac might answer this and i will have a good read through your link later. It looks exactly the sort of thing I need.
Thank you again. It costs nothing to be pleasant and helpful does it?

Dal_Whinnie

One important question, is it a furnished or unfurnished property because this will make a difference to what you can claim. The majority of properties are let under Assured Shorthold tenancies and I assume that is probably the case here. Also, where is the ownership of the property (i.e is it owned by individuals or through a company) and is it held as an investment (i.e. to produce rent) or is it a development property which is just being let whilst it is being sold.

Regarding deductions the expense has to be 'wholly and exclusively' incurred for the purposes of the rental business. This means it actually has to be paid for so time spent by landlord, holiday used up by landlord, etc cannot be claimed. So no, you cannot claim for your own labour. Also it has to be an expense incurred in producing income so that expenses of buying the property or improving it (e.g. adding an additional bathroom) are not deductible.

Following may be allowable

• interst on mortgage (but not capital repayment)
• agents fees (if using agent)
• repairs and maintenance (this can include an element of improvement but only where it is incidental to the repair). If cost is an improvement it may be possible to claim part of cost as repair.
• Cost of materials purchased by landlord to undertake repairs (but not landlords own time)
• cost of travel to property in managing property (you can either claim actual costs or if driving claim current HMRC rate - maximum I believe is 45p per mile)
• Any other costs incurred which would not otherwise have been incurred other than for the property.
• I would doubt that laptop would qualify unless it was not used for any private purpose. If you have any tools, etc which are used just for maintaining property you may be able to claim capital allowances on these but again need to be used solely for rental business (although may be able to claim proportion if this can be supported) Cost of specific software should be ok though.
• Ground rent and other service charges if property is leasehold

TrulyMadly

Hi dal,

The properties are unfurnished and let under an assured short hold tenancy. They are owned by one individual for the purposes of investment. Just wondering though. If I need to call out a plumber to fix the boiler, I am assuming his labour costs would be an expense. If I am a plumber why would I not be able to put through my labour costs. Just for argument sake.

Thanks for your advice. Much appreciated.

chrismac1

You need invoices to back up spends to claim tax relief. I could choose to hire a local accountant to put together my accounts, there are some HMRC stooges in this thread who'll tell you that's the only way I'd get a decent set of books! If I spend £1,000 and have an invoice for that I get tax relief at 20% (corporation tax rate for my company) so the net spend is £800.

But I do my own books. Spend equals zero. No invoice to back up the spend. I am £800 better off than if I had used the local guy. So there is no way the taxpayer is going to give you any tax relief on that non-spend.

Suppose they did. All these dodgy public sector guys like the head of Student Loans Company, head of HMRC and head of HMRC IT would suddenly go from paying less tax than they should to paying no tax at all.......

HappyMJ

TrulyMadly wrote: »

Hi dal,

The properties are unfurnished and let under an assured short hold tenancy. They are owned by one individual for the purposes of investment. Just wondering though. If I need to call out a plumber to fix the boiler, I am assuming his labour costs would be an expense. If I am a plumber why would I not be able to put through my labour costs. Just for argument sake.

Thanks for your advice. Much appreciated.

Yes....but....It cancels each other out. I have a limited company and I can claim my own labour expense as an expense against the company income to reduce it's tax. But....on my personal tax return I have to declare the income and pay tax on it there. So I am no worse off and no better off. It's exactly the same.

Dal_Whinnie

TrulyMadly wrote: »

Hi dal,

The properties are unfurnished and let under an assured short hold tenancy. They are owned by one individual for the purposes of investment. Just wondering though. If I need to call out a plumber to fix the boiler, I am assuming his labour costs would be an expense. If I am a plumber why would I not be able to put through my labour costs. Just for argument sake.

If you needed to call out a plumber to fix the boiler then the amount you paid them would be an allowable deduction against your rent. If you happen to be a plumber and in business as such, then if you (as plumber) charged yourself (as landlord) then if you were able to claim the expense against rent you would have to include as income from your plumbing business and pay tax and NI on it, so you would actually be worse off because of the NI.

If either your rental business or plumbing business were in a limited company (not the same company) then these would be separate legal entities so you could charge but you would still need to include it as income in the supplying business