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It’s that dreaded time of year again when our owners are besieged with questions from well-meaning accountants, asking for receipts, invoices, and information on all transactions that have occurred in the last 12 months! Yes, it’s tax return time!!
We see some really common questions year after year, and hopefully, we can help answer them in one place for you!
1. Why don’t the fees and rental income amounts tally?
While rent amounts in each month are fairly easy to allocate, you must remember to look at the frequency and when your lettings/management fees were paid.
For example, most owners will look at a monthly rent of £1,000 per month (£12,000 per annum) and expect to submit fees equivalent to this income.
For example, if your tenancy started in March 2022, you’ll be putting through income for April 2022 - March 2023 in this year's tax return. However, the letting and management fee would have been entirely paid in March 2022 and, therefore, would sit in last year's tax return.
Likewise, if your resident does not pay monthly and makes a lump sum payment, you need to look at when this payment was received. Depending on where it was received in the 12-month cycle, it can over- or under-inflate rent. If received in advance at the start, it will not be considered evenly spread for the purposes of the tax return.
If you would prefer to have fees and rent offset monthly in real-time, we now offer the ability to spread payment over a tenancy for an additional 1%+vat, which in this example would equate to £10+vat per month.
2. Will I automatically receive end-of-year statements?
Not all of our owners require this service, so we don’t automate it. We have many overseas owners who are working at different times and who don’t want or need to receive this!
If you want to receive these without having to ask, please let us know, and we can make a note to send them annually.
Why not opt for our full management service? This will centralise all costs relating to your property for repairs and maintenance, meaning a smoother tax return at the end of the year! Management fees are (you guessed it) tax-deductible, after all!
3. What items are tax deductible?
Changing on a yearly basis can be hard to keep up with what you can and can’t deduct for now.
The best answer is to seek independent advice on this, which should ensure nothing is missed, but WHICH? We have published a guide only this month offering the most recent confirmed deductible items—take a look here: Expenses and allowances landlords can claim.
If you have any questions, please don’t hesitate to contact our accounts team at [email protected].
