Landlord accounts keeping & tax return
Discussion
Hi All,
I have a few newbie questions if you don't mind. I have not needed to do a tax return before as I have always been employed. I am just about to let a place out and I was wondering about the best way of keeping records for when I need to do a tax return next year.
I understand I can offset the tax I pay with a limited set of expenses, so accurate records of costs and income is important.
For costs to be eligible to offset, do they need to be invoiced to me? I have for example an electrician's invoice for works arranged by the letting manager. The invoice is made out to the letting agency and the manager has suggested that he can pay it or I could settle it directly. If I settled it, would it need to be re-invoiced to me for it to be eligible?
How should records be kept? I'm not set up as a business and it is only one property, so I am thinking that a spreadsheet backed up to Onedrive will do, and that I will scan or photograph receipts and invoices. Most invoices are received electronically, so I don't suppose there is much point printing them out and filing them for years. Are photographed receipts ok?
I don't have any other income apart from my employer who will send me a P60 annually and a small amount of interest from a cash ISA.
Thanks.
I have a few newbie questions if you don't mind. I have not needed to do a tax return before as I have always been employed. I am just about to let a place out and I was wondering about the best way of keeping records for when I need to do a tax return next year.
I understand I can offset the tax I pay with a limited set of expenses, so accurate records of costs and income is important.
For costs to be eligible to offset, do they need to be invoiced to me? I have for example an electrician's invoice for works arranged by the letting manager. The invoice is made out to the letting agency and the manager has suggested that he can pay it or I could settle it directly. If I settled it, would it need to be re-invoiced to me for it to be eligible?
How should records be kept? I'm not set up as a business and it is only one property, so I am thinking that a spreadsheet backed up to Onedrive will do, and that I will scan or photograph receipts and invoices. Most invoices are received electronically, so I don't suppose there is much point printing them out and filing them for years. Are photographed receipts ok?
I don't have any other income apart from my employer who will send me a P60 annually and a small amount of interest from a cash ISA.
Thanks.
You offset legitimate rental related expenses against your gross rental income to arrive a rental profit figure. You pay tax on the rental profit.
You must keep documentary evidence of the expenses you claim. The evidence is best in the form of invoices or receipts - which can be paper or electronic.
You must keep documentary evidence of the expenses you claim. The evidence is best in the form of invoices or receipts - which can be paper or electronic.
AlexC1981 said:
Hi All,
I have a few newbie questions if you don't mind. I have not needed to do a tax return before as I have always been employed. I am just about to let a place out and I was wondering about the best way of keeping records for when I need to do a tax return next year.
I understand I can offset the tax I pay with a limited set of expenses, so accurate records of costs and income is important.
For costs to be eligible to offset, do they need to be invoiced to me? I have for example an electrician's invoice for works arranged by the letting manager. The invoice is made out to the letting agency and the manager has suggested that he can pay it or I could settle it directly. If I settled it, would it need to be re-invoiced to me for it to be eligible?
How should records be kept? I'm not set up as a business and it is only one property, so I am thinking that a spreadsheet backed up to Onedrive will do, and that I will scan or photograph receipts and invoices. Most invoices are received electronically, so I don't suppose there is much point printing them out and filing them for years. Are photographed receipts ok?
I don't have any other income apart from my employer who will send me a P60 annually and a small amount of interest from a cash ISA.
Thanks.
We keep all our records on a spreadsheet and all invoices are scanned into folders for each year. The invoices for property-related work almost always have the address of the property they relate to on them so (IMO) that should be sufficient for HMRC purposes. Even if they didn't then as long as it's obvious that it's for property maintenance I can't see why HMRC would make a big deal about it.I have a few newbie questions if you don't mind. I have not needed to do a tax return before as I have always been employed. I am just about to let a place out and I was wondering about the best way of keeping records for when I need to do a tax return next year.
I understand I can offset the tax I pay with a limited set of expenses, so accurate records of costs and income is important.
For costs to be eligible to offset, do they need to be invoiced to me? I have for example an electrician's invoice for works arranged by the letting manager. The invoice is made out to the letting agency and the manager has suggested that he can pay it or I could settle it directly. If I settled it, would it need to be re-invoiced to me for it to be eligible?
How should records be kept? I'm not set up as a business and it is only one property, so I am thinking that a spreadsheet backed up to Onedrive will do, and that I will scan or photograph receipts and invoices. Most invoices are received electronically, so I don't suppose there is much point printing them out and filing them for years. Are photographed receipts ok?
I don't have any other income apart from my employer who will send me a P60 annually and a small amount of interest from a cash ISA.
Thanks.
Although we've never tried to be creative with the accounting my guess is that HMRC will take a reasonable approach. e.g. if you're receiving £10k pa rent and you've claimed £1k for property repairs/maintenance that wouldn't raise any eyebrows. OTOH if you've claimed £15k in property maintenance then they're probably going to want a greater level of proof (even if you have an invoice that's been countersigned by the Pope and the Queen).
Eric Mc said:
You offset legitimate rental related expenses against your gross rental income to arrive a rental profit figure. You pay tax on the rental profit.
You must keep documentary evidence of the expenses you claim. The evidence is best in the form of invoices or receipts - which can be paper or electronic.
Although let's be honest, HMRC don't usually audit Simple self assessments, if they look average. You must keep documentary evidence of the expenses you claim. The evidence is best in the form of invoices or receipts - which can be paper or electronic.
We have a separate bank account for the buy to let, and I never buy anything for it, unless it goes through that account, and then once a year, I download an excel spreadsheet, and scan in every receipt, (which I keep in a box) and then I put every payment in and out into a series of columns (insurance in one, repairs in another, rent in another, advertising and referencing costs in another and so on. Then i divide each one into 10% and 90% (we filled in form 17 declaring my wife has a 90% interest), then i do 2 self assessments. Take me about an evening and another 2 evenings to explain it to my wife, before she's confident enough to click submit.
Countdown said:
AlexC1981 said:
Hi All,
I have a few newbie questions if you don't mind. I have not needed to do a tax return before as I have always been employed. I am just about to let a place out and I was wondering about the best way of keeping records for when I need to do a tax return next year.
I understand I can offset the tax I pay with a limited set of expenses, so accurate records of costs and income is important.
For costs to be eligible to offset, do they need to be invoiced to me? I have for example an electrician's invoice for works arranged by the letting manager. The invoice is made out to the letting agency and the manager has suggested that he can pay it or I could settle it directly. If I settled it, would it need to be re-invoiced to me for it to be eligible?
How should records be kept? I'm not set up as a business and it is only one property, so I am thinking that a spreadsheet backed up to Onedrive will do, and that I will scan or photograph receipts and invoices. Most invoices are received electronically, so I don't suppose there is much point printing them out and filing them for years. Are photographed receipts ok?
I don't have any other income apart from my employer who will send me a P60 annually and a small amount of interest from a cash ISA.
Thanks.
We keep all our records on a spreadsheet and all invoices are scanned into folders for each year. The invoices for property-related work almost always have the address of the property they relate to on them so (IMO) that should be sufficient for HMRC purposes. Even if they didn't then as long as it's obvious that it's for property maintenance I can't see why HMRC would make a big deal about it.I have a few newbie questions if you don't mind. I have not needed to do a tax return before as I have always been employed. I am just about to let a place out and I was wondering about the best way of keeping records for when I need to do a tax return next year.
I understand I can offset the tax I pay with a limited set of expenses, so accurate records of costs and income is important.
For costs to be eligible to offset, do they need to be invoiced to me? I have for example an electrician's invoice for works arranged by the letting manager. The invoice is made out to the letting agency and the manager has suggested that he can pay it or I could settle it directly. If I settled it, would it need to be re-invoiced to me for it to be eligible?
How should records be kept? I'm not set up as a business and it is only one property, so I am thinking that a spreadsheet backed up to Onedrive will do, and that I will scan or photograph receipts and invoices. Most invoices are received electronically, so I don't suppose there is much point printing them out and filing them for years. Are photographed receipts ok?
I don't have any other income apart from my employer who will send me a P60 annually and a small amount of interest from a cash ISA.
Thanks.
Although we've never tried to be creative with the accounting my guess is that HMRC will take a reasonable approach. e.g. if you're receiving £10k pa rent and you've claimed £1k for property repairs/maintenance that wouldn't raise any eyebrows. OTOH if you've claimed £15k in property maintenance then they're probably going to want a greater level of proof (even if you have an invoice that's been countersigned by the Pope and the Queen).
Previous years have always been significantly lower
Pit Pony said:
Although let's be honest, HMRC don't usually audit Simple self assessments, if they look average.
We have a separate bank account for the buy to let, and I never buy anything for it, unless it goes through that account, and then once a year, I download an excel spreadsheet, and scan in every receipt, (which I keep in a box) and then I put every payment in and out into a series of columns (insurance in one, repairs in another, rent in another, advertising and referencing costs in another and so on. Then i divide each one into 10% and 90% (we filled in form 17 declaring my wife has a 90% interest), then i do 2 self assessments. Take me about an evening and another 2 evenings to explain it to my wife, before she's confident enough to click submit.
You should never put in figures using the assumption that “they’ll never check them”. That is illegal in itself.We have a separate bank account for the buy to let, and I never buy anything for it, unless it goes through that account, and then once a year, I download an excel spreadsheet, and scan in every receipt, (which I keep in a box) and then I put every payment in and out into a series of columns (insurance in one, repairs in another, rent in another, advertising and referencing costs in another and so on. Then i divide each one into 10% and 90% (we filled in form 17 declaring my wife has a 90% interest), then i do 2 self assessments. Take me about an evening and another 2 evenings to explain it to my wife, before she's confident enough to click submit.
We only have two more years of Self Assessment. From April 2024 landlords will be submitting full details of their rental records every three months so everybody is going to have to up their game.
Eric Mc said:
Pit Pony said:
Although let's be honest, HMRC don't usually audit Simple self assessments, if they look average.
We have a separate bank account for the buy to let, and I never buy anything for it, unless it goes through that account, and then once a year, I download an excel spreadsheet, and scan in every receipt, (which I keep in a box) and then I put every payment in and out into a series of columns (insurance in one, repairs in another, rent in another, advertising and referencing costs in another and so on. Then i divide each one into 10% and 90% (we filled in form 17 declaring my wife has a 90% interest), then i do 2 self assessments. Take me about an evening and another 2 evenings to explain it to my wife, before she's confident enough to click submit.
You should never put in figures using the assumption that “they’ll never check them”. That is illegal in itself.We have a separate bank account for the buy to let, and I never buy anything for it, unless it goes through that account, and then once a year, I download an excel spreadsheet, and scan in every receipt, (which I keep in a box) and then I put every payment in and out into a series of columns (insurance in one, repairs in another, rent in another, advertising and referencing costs in another and so on. Then i divide each one into 10% and 90% (we filled in form 17 declaring my wife has a 90% interest), then i do 2 self assessments. Take me about an evening and another 2 evenings to explain it to my wife, before she's confident enough to click submit.
We only have two more years of Self Assessment. From April 2024 landlords will be submitting full details of their rental records every three months so everybody is going to have to up their game.
Doing it every 3 months will be irritating.
HMRC originally wanted “full detail” submissions I.e ALL transactions, not just summary totals.
It’s not clear if they have rowed back on this at this moment in time.
Making expense claims without back up proof of the expenses claimed is not allowed. That is the law.
HMRC sets out in detail what they will accept as proof.
It’s not clear if they have rowed back on this at this moment in time.
Making expense claims without back up proof of the expenses claimed is not allowed. That is the law.
HMRC sets out in detail what they will accept as proof.
That's great, thanks everyone. I'll set up a folder for each year as suggested, though sounds like I'll have to set up quarterly folders in a couple of years. I'll keep electronic invoices and photographed receipts on my PC and Onedrive.
That's also a good idea about downloading the CSV file from my bank. I just tried it on my current account and I can see it's really going to help. I originally thought it wouldn't be worth having a separate bank account just for one flat, however it is starting to sound a lot more sensible to help manage quarterly figures.
That's also a good idea about downloading the CSV file from my bank. I just tried it on my current account and I can see it's really going to help. I originally thought it wouldn't be worth having a separate bank account just for one flat, however it is starting to sound a lot more sensible to help manage quarterly figures.
Pit Pony said:
Although let's be honest, HMRC don't usually audit Simple self assessments, if they look average.
Mrs J paid CGT following the sale of a property a few months ago. We used the online HMRC calculator and input all costs and let it calculate the bill. We uploaded copies of invoices / statements from the solicitors for both the purchase and sale and our calculation for Private Residential Relief, it was her home / residence before we met.
We've been wondering if HMRC would review or audit it?
Pit Pony said:
Eric Mc said:
You offset legitimate rental related expenses against your gross rental income to arrive a rental profit figure. You pay tax on the rental profit.
You must keep documentary evidence of the expenses you claim. The evidence is best in the form of invoices or receipts - which can be paper or electronic.
Although let's be honest, HMRC don't usually audit Simple self assessments, if they look average. You must keep documentary evidence of the expenses you claim. The evidence is best in the form of invoices or receipts - which can be paper or electronic.
We have a separate bank account for the buy to let, and I never buy anything for it, unless it goes through that account, and then once a year, I download an excel spreadsheet, and scan in every receipt, (which I keep in a box) and then I put every payment in and out into a series of columns (insurance in one, repairs in another, rent in another, advertising and referencing costs in another and so on. Then i divide each one into 10% and 90% (we filled in form 17 declaring my wife has a 90% interest), then i do 2 self assessments. Take me about an evening and another 2 evenings to explain it to my wife, before she's confident enough to click submit.
Id love to switch where the rental income is recognised but they are all in my name….
sociopath said:
rfisher said:
Eric Mc said:
In 2024 HMRC will expect landlords to use specialist software for their rental accounts.
Will they provide the software?If not, how much will it cost?
Will that apply to commercial property?
An unnecessary amount
Yes
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