Goodwill payment from letting agent to landlord, do I deduct it from expenses?

simon_or

Hi,

I own a rental property that was until last year managed by an agent. After I ended the contract, I made a complaint about multiple failures in service. I declined their initial offer of a small Goodwill payment and went to the TPO (Ombudsman). To cut a long short, the TPO ordered a higher payment for the poor service and distress which I accepted. Nothing huge, a couple of hundred pounds.

My question is, do I need to deduct this goodwill payment from allowable letting agent expenses when doing my tax return or does it not feature at all? The exact term used on the statement is 'c/n TPO Award' if that helps.

Thanks.

Jeremy535897

The receipt should be exempt from tax. See: https://www.ftadviser.com/your-industry/2018/01/10/q-a-when-does-tax-apply-to-compensation/

"Compensation for personal suffering and injury is exempt from capital gains (and income) tax. The exemption applies to ‘compensation or damages for any wrong or injury suffered by an individual in his person or in his profession or vocation’. HMRC sets a wide definition of injury, so that damages or compensation for ‘distress, embarrassment, loss of reputation or dignity’ such as unfair discrimination and defamation are not chargeable."

simon_or

Thanks Jeremy, that makes sense! I'll keep a record of it in any case.