Rent for next month in which tax return?

Sillychuckie

My tenants pay upfront for each month of rent.
I received a payment on 15th March, which covers their rental period for the following month (15th April -> 15th May).

Do I declare it in my tax return for 2013/14, because I received it on 15th March? Or, is it actually part of 2014/15 income, since it is paying for a service which falls over this tax year?

With expenses such as insurance premiums, I tend to apportion them into each tax year according to the number of days, so I'm guessing the answer might be #2, but I'm not sure.

Time for an accountant, perhaps.
Thanks.
SC

jackomdj

Take a look at this.

http://www.dummies.com/how-to/content/understanding-accounting-methods.html

It doesn't really matter, so long as you are consistent. Ie you wouldn't be able to defer your income to next year but claim all your expenses.

Since you are apportioning your expenses into their actual months you should defer your income too.

Sillychuckie

Thanks.
I guess I am making life more complicated by apportioning then... but its simple enough maths, so I'll keep doing it (as I have started along that path).
Shall do the same for income. Cheers for the help.

SC

thequant

Strictly speaking, its not when money is received or when services or goods are delivered that count for accounting purposes but when they are invoiced. If your tenants pay up front, although there is not an invoice, there is an implied invoice. So log it as the day they are EXPECTED to pay.

Kynthia

If your income is low enough you can complete your return on a cash basis rather than an accruals basis, but you can't chop and change between the methods.

Cash basis, treat income and expenditure based on the date the actual cash came in or went out. It's irrelevant when the goods and services were received or provided, or when the invoice is dated.

Accruals basis, treat income and expenditure based on when the goods and services were actually received or provided. It is irrelevant when the cash actually was received or spent.