Tax Returns

the_salmon

Hi all,

This year is my first time doing one as a landlord. For this 1st year I am probably going to pay for someone to do it so I check I get it right.

But I am having an initial go myself to give me an idea now.

I have been charged for a repair (£50) and there is £10 of VAT that I have had to pay, am I right to think that I would put that down as £60 for that specific repair?

2nd question is around building insurance. I took buildings insurance out for the property in Jan 2012 but didnt let it out until June 2012 and obviously this is covering that tax year 2012-13. Would I only claim for 9/12ths of what I had paid in insurance that were in this tax year, and then 3/12ths of the renewal in 2013?

Thanks in advance

anselld

the_salmon wrote: »

Hi all,

This year is my first time doing one as a landlord. For this 1st year I am probably going to pay for someone to do it so I check I get it right.

But I am having an initial go myself to give me an idea now.

I have been charged for a repair (£50) and there is £10 of VAT that I have had to pay, am I right to think that I would put that down as £60 for that specific repair?

2nd question is around building insurance. I took buildings insurance out for the property in Jan 2012 but didnt let it out until June 2012 and obviously this is covering that tax year 2012-13. Would I only claim for 9/12ths of what I had paid in insurance that were in this tax year, and then 3/12ths of the renewal in 2013?

Thanks in advance

£60 inc vat is correct.

Provided your property income does not exceed 15000 you can use "cash basis", ie claim the whole amount at the date paid. Otherwise you have to split it as suggested. Whatever basis you use you must be consistent.

The business does not start until first let, but you can claim certain expenses prior to this provided they were wholly and exclusively for business use. eg you could not claim if you paid the insurance but lived in the property yourself whilst waiting to let it; it would need to be empty awaiting let.

Kynthia

Your expenses are what you paid and you paid the amount including VAT.

If you report using a cash basis, you record all your income and expenses in the tax year you actually received or paid the cash irrespective of when it is for. For example, if you paid a LA up front to manage the property from 06/12 to 05/13 then you would record the whole amount in 06/12 as that is when you physically paid the cash.

If you report using an accruals basis (which is the recommended method), you report income and expenditure in the year it applies and pro rata if need be. For example, the management fee would apply to the whole 12 months of the tenancy and therefore should be spread across those months. This would mean 10/12 in 2012/13 tax return and 2/12 in 2013/14 tax return.

the_salmon

Many thanks to you both for that.

So I will incude VAT (thats what I wanted to hear)!

I let the property in June, but it was empty and available in April and May but not let, so in theory I can claim expenses for that time (I wasn't living in the property at that time and it was 'available for letting').

I can probably break down the costs that have gone across 2 financial years such as the insurance as they are easy enough to work out.

Many thanks again.