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  • FIRST POST
    • pinklady21
    • By pinklady21 4th Jan 18, 4:33 PM
    • 611Posts
    • 423Thanks
    pinklady21
    Property Letting - allowable expenses
    • #1
    • 4th Jan 18, 4:33 PM
    Property Letting - allowable expenses 4th Jan 18 at 4:33 PM
    Hello
    Wonder if anyone can give me a sanity check on the allowable letting expenses I am including in my SA tax return for 2016/17.

    I understand that the 10% Wear and Tear allowance is no longer permitted.
    I am a bit worried I might have missed something, or included something that I should not.....

    The list of expenses against the gross rent includes:

    Mortgage Interest
    Insurance
    Repairs
    Travel Expenses for visits to property
    Stationery and Postage
    Telephone calls
    Utility bills / council tax during void periods
    Replacement of furnishings
    Letting agent fees
    Advertising fees

    Please let me know if I have missed anything.
    Thank you!
Page 1
    • 00ec25
    • By 00ec25 4th Jan 18, 6:41 PM
    • 6,514 Posts
    • 6,077 Thanks
    00ec25
    • #2
    • 4th Jan 18, 6:41 PM
    • #2
    • 4th Jan 18, 6:41 PM
    https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income
    • Sale2018
    • By Sale2018 5th Jan 18, 7:17 PM
    • 9 Posts
    • 19 Thanks
    Sale2018
    • #3
    • 5th Jan 18, 7:17 PM
    • #3
    • 5th Jan 18, 7:17 PM
    Ground rent if your property is leasehold.

    Travel expenses, my accountant said I can't deduct these as this is only for Ltd companies???.
    • 00ec25
    • By 00ec25 5th Jan 18, 7:24 PM
    • 6,514 Posts
    • 6,077 Thanks
    00ec25
    • #4
    • 5th Jan 18, 7:24 PM
    • #4
    • 5th Jan 18, 7:24 PM
    Travel expenses, my accountant said I can't deduct these as this is only for Ltd companies???.
    Originally posted by Sale2018
    your accountant is wrong, or being lazy not wanting to explain it

    Travel expenses are a target for HMRC so if claimed then expect to be challenged to prove that the cost was wholly and necessarily incurred on the property related business only and did not involve any other "activity" at the same time.

    You can't go shopping whilst visiting the property and you can't claim the mileage if you were simply stopping off there on the way to somewhere else as the purpose of the journey was not wholly business related.
    • Sale2018
    • By Sale2018 5th Jan 18, 10:49 PM
    • 9 Posts
    • 19 Thanks
    Sale2018
    • #5
    • 5th Jan 18, 10:49 PM
    • #5
    • 5th Jan 18, 10:49 PM
    Thanks for the clarification. In the past 7 years my accountant has not allowed me to deduct travel expenses.

    Can I ask what records do you keep for these travel expenses, I sure will press my accountant for a better explaination.

    As for the mortgage interest, isn't that being phased out??.

    Thanks again.
    • chrismac1
    • By chrismac1 6th Jan 18, 8:44 AM
    • 2,495 Posts
    • 1,478 Thanks
    chrismac1
    • #6
    • 6th Jan 18, 8:44 AM
    • #6
    • 6th Jan 18, 8:44 AM
    To give a specific example, a client of mine (I am an accountant) had a chalet in Chamonix. She made 5 or so trips there a year.

    Two were on her own and on each she had a lot of appointments with property agents, cleaners, repairers and so on. No skiing. In my view no ancillary purpose, so we claimed all the expenses relating to these trips.

    The other trips were for her whole family and involved skiing. Clear ancillary purpose, so not claimed as business expense.
    Hideous Muddles from Right Charlies
    • 00ec25
    • By 00ec25 6th Jan 18, 9:55 AM
    • 6,514 Posts
    • 6,077 Thanks
    00ec25
    • #7
    • 6th Jan 18, 9:55 AM
    • #7
    • 6th Jan 18, 9:55 AM
    Thanks for the clarification. In the past 7 years my accountant has not allowed me to deduct travel expenses.

    Can I ask what records do you keep for these travel expenses, I sure will press my accountant for a better explaination.
    Originally posted by Sale2018
    it is not as simple as a tick list. As chrismac1 says, you have to be able to explain why you went there and be convincing.

    As for the mortgage interest, isn't that being phased out??.

    Thanks again.
    Originally posted by Sale2018
    no they are not being "phased out", the rules are however different wef April 2017

    https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies
    • Mahsroh
    • By Mahsroh 15th Jan 18, 2:32 PM
    • 339 Posts
    • 330 Thanks
    Mahsroh
    • #8
    • 15th Jan 18, 2:32 PM
    • #8
    • 15th Jan 18, 2:32 PM
    Personally, I've never claimed any travel expenses, even though there is an entitlement to do so.


    As others have said, it's hard to prove, likely to be challenged and more often than not is part of a "multi-purpose" trip.
    • Emilybutt12
    • By Emilybutt12 2nd Mar 18, 10:45 AM
    • 4 Posts
    • 0 Thanks
    Emilybutt12
    • #9
    • 2nd Mar 18, 10:45 AM
    Life insurance
    • #9
    • 2nd Mar 18, 10:45 AM
    Hi,

    I was wondering whether anyone knows whether the monthly cost for life insurance is an allowable expense? I am hoping to take out a decreasing term policy covering my mortgage only, so nothing personal.

    Many thanks
    • Pennywise
    • By Pennywise 2nd Mar 18, 10:46 AM
    • 10,230 Posts
    • 19,043 Thanks
    Pennywise
    Hi,

    I was wondering whether anyone knows whether the monthly cost for life insurance is an allowable expense? I am hoping to take out a decreasing term policy covering my mortgage only, so nothing personal.

    Many thanks
    Originally posted by Emilybutt12
    No, life insurance isn't allowable.
    • AnotherJoe
    • By AnotherJoe 2nd Mar 18, 10:50 AM
    • 9,606 Posts
    • 10,683 Thanks
    AnotherJoe
    Hi,

    I was wondering whether anyone knows whether the monthly cost for life insurance is an allowable expense? I am hoping to take out a decreasing term policy covering my mortgage only, so nothing personal.

    Many thanks
    Originally posted by Emilybutt12
    How is life insurance not personal?
    • John-K
    • By John-K 3rd Mar 18, 11:20 PM
    • 654 Posts
    • 1,016 Thanks
    John-K
    To give a specific example, a client of mine (I am an accountant) had a chalet in Chamonix. She made 5 or so trips there a year.

    Two were on her own and on each she had a lot of appointments with property agents, cleaners, repairers and so on. No skiing. In my view no ancillary purpose, so we claimed all the expenses relating to these trips.

    The other trips were for her whole family and involved skiing. Clear ancillary purpose, so not claimed as business expense.
    Originally posted by chrismac1
    Any chance you can offer an opinion on this one?..

    Rental property at the other end of the country, and during renovations I rptravelled up first class on the train once a month to supervise, inspect, direct etc.

    Each time I stayed at my parentsí house nearby, rather than in a hotel.

    Do you think that that would be allowable?
    • 00ec25
    • By 00ec25 4th Mar 18, 9:09 AM
    • 6,514 Posts
    • 6,077 Thanks
    00ec25
    Any chance you can offer an opinion on this one?..

    Rental property at the other end of the country, and during renovations I rptravelled up first class on the train once a month to supervise, inspect, direct etc.

    Each time I stayed at my parentsí house nearby, rather than in a hotel.

    Do you think that that would be allowable?
    Originally posted by John-K
    possible provided you are able to convince HMRC that your daytime was spent on the property business and the mere fact you stayed with your parents and spoke to them in the evenings was irrelevant. Also of course how long you stayed would be an important factor if you only spent 1 day on site but stayed 3 nights for example?
    • Pennywise
    • By Pennywise 4th Mar 18, 11:58 AM
    • 10,230 Posts
    • 19,043 Thanks
    Pennywise
    possible provided you are able to convince HMRC that your daytime was spent on the property business and the mere fact you stayed with your parents and spoke to them in the evenings was irrelevant. Also of course how long you stayed would be an important factor if you only spent 1 day on site but stayed 3 nights for example?
    Originally posted by 00ec25
    Agree with this - HMRC would argue duality of purpose. It would be to prove that your motivation, intent, etc was the property, and not visiting your parents. The pattern of visits before and after the renovation would need to be very different. Ie if you went to your parents once a year before and after, but monthly during the renovations, then you have a strong argument, but it you always go monthly, before, during and after, you'd probably not be allowed any of the visits.
    • Cheeky_Monkey
    • By Cheeky_Monkey 4th Mar 18, 1:50 PM
    • 1,691 Posts
    • 3,572 Thanks
    Cheeky_Monkey
    I think they would also question why you travelled first class rather than standard class!
    I used to be indecisive - now I'm not so sure
    • 00ec25
    • By 00ec25 4th Mar 18, 2:03 PM
    • 6,514 Posts
    • 6,077 Thanks
    00ec25
    I think they would also question why you travelled first class rather than standard class!
    Originally posted by Cheeky_Monkey
    no they would not, the principle is the same even if the rules are those for employees

    https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim31835

    For example,you should not refuse a deduction for first class rail travel, if that has been incurred, on the basis that the same journey could have been made more cheaply in standard class.
    • chrismac1
    • By chrismac1 4th Mar 18, 6:56 PM
    • 2,495 Posts
    • 1,478 Thanks
    chrismac1
    On the life insurance and similar protection policies, everyone wants to claim this as a business expense. But funnily enough in my experience clients and their beneficiaries, where they have claimed insurance premia as business expenses, have a tendency to get upset when the proceeds of claims are then treated as business income.

    You can't have this both ways.
    Hideous Muddles from Right Charlies
    • John-K
    • By John-K 4th Mar 18, 6:59 PM
    • 654 Posts
    • 1,016 Thanks
    John-K
    possible provided you are able to convince HMRC that your daytime was spent on the property business and the mere fact you stayed with your parents and spoke to them in the evenings was irrelevant. Also of course how long you stayed would be an important factor if you only spent 1 day on site but stayed 3 nights for example?
    Originally posted by 00ec25
    Thanks. It was two nights each time, up after work, day and a half on site, then back home in the afternoon.

    Apologies for hijacking the thread...
    • John-K
    • By John-K 4th Mar 18, 7:02 PM
    • 654 Posts
    • 1,016 Thanks
    John-K
    I think they would also question why you travelled first class rather than standard class!
    Originally posted by Cheeky_Monkey
    If they did the answer would be that it is much nicer...

    Although (as my presence here should show), money saving matters to me, I no longer like travelling standard class on the trains. Too many groups of lads in their twenties acting like I did when I was a young lad in my twenties...
    • Emilybutt12
    • By Emilybutt12 4th Mar 18, 11:32 PM
    • 4 Posts
    • 0 Thanks
    Emilybutt12
    I can't seem to respond to a post. But Another Joe you asked how this wasn't personal.
    What I was referring to was that the life insurance sum is solely for the buy to let mortgage, it would not cover my residential mortgage or a sum of money left to my spouse or dependent. It's purely business.

    And Chrismac1 I would assume that with any buy to let property when it came to sell it whether the owner was alive or not there would be CGT and/or inheritance tax to pay. Business and self assessment are slightly different kettle of fish though. My understanding is that insurance is an allowable expense for businesses in order to cover any loss of income if that insured person were to die. As with what seems to be the case for small fry landlords like myself, ie those who don't have property in a limited company, there are the opposite rules - if I were to die my family would have a loss of income as the property would no longer be mine, and my beneficiary may or may not be able to get a mortgage.

    Thank you for your responses.
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