HMRC Way of Calculating Tax on Property Rental

Leodogger

When completing your Self Assessment should you input your rental received on property pro rata from 6/4 to the end of the first monthly rental period or do the HMRC only want full months' rental input throughout the year for tax purposes and does this apply to all the commissions you pay and other income throughout the year such as pensions ?

Lokolo

I believe you put whatever you get in terms of £. So if you get paid £300 on April 1st, you put £300, not £5 (5 days in April pre end of the tax year).

theartfullodger

You should report what you should have got. And if there are arrears, they go down as "bad debt" in other expenses, to be declared later if ever recovered.


There is guidance and webinars on HMRC website.

Leodogger

Perhaps I didn't explain myself correctly. Tax years run from 6th April to 5th April the following year. If you receive £600 on 30th April, do you enter the £600 for April or do you pro rata it i.e. £600 divided by 30 days for April and multiply by 25 days (6/4 to 30/4), result £500 ?

Leodogger

So I ignore the fact that there are only 25 days in April from 6th-30th and enter the total rent paid for the whole month of April?

00ec25

JWhite wrote: »

Perhaps I didn't explain myself correctly. Tax years run from 6th April to 5th April the following year. If you receive £600 on 30th April, do you enter the £600 for April or do you pro rata it i.e. £600 divided by 30 days for April and multiply by 25 days (6/4 to 30/4), result £500 ?

since your question is what is the HMRC way of calculating tax, why have you not read the HMRC notes explaining what to do?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/690391/sa105-Notes-2018.pdf

you can choose to do it the accruals method as listed by artful, but from 17/18 onwards the expectation is you won't ...

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1092

by the sounds of it you also need to do the HMRC course on how to work out your income and expenses:
http://www.hmrc.gov.uk/courses/syob3/new_letting/HTML/new_letting_menu.html

Leodogger

Thanks for that, I am a newbie to this game