Paying for major works in March – which tax year?

Paying for major works in March – which tax year?

16:20 PM, 3rd March 2022, About 2 years ago 3

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Hi, my managing agents to a flat I rent are asking for a £2k payment for major works, which is fine as they have done the section 20.

The question I have is if I paid it now (March 2022), can I include this in the next year 2022/23 self-assessment or will it need to be the current 2021/22 tax assessment?

Ideally, my preference is 2022/23. The agents are badgering for me to pay now, so just need to know the tax law before I either pay now or ask to delay until April 6th.

Thanks in advance.

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10:54 AM, 4th March 2022, About 2 years ago

When you complete your tax return you state whether the accounts have been prepared on the traditional, or cash basis. You will have to follow that.


11:09 AM, 4th March 2022, About 2 years ago

The 'tax point' so to speak, will be the due date for the service charge, as detailed on the demand and in the wording of the lease. The payment date is irrelevant.

And if your accounts are done on a historical cost accounting basis, the period covered by the service charge is important - and again the payment date is irrelevant.

Robert M

21:35 PM, 5th March 2022, About 2 years ago

As a chartered accountant and chartered tax advisor I am reminded of the story about a business owner asking what his profit for the year just ended and the reply asking what he wanted it to be.

If you are on the cash basis it would seem date of payment prevails. If you are on the accruals basis I would argue it depends on when the work starts (or started) and ends (or ended).

As it sounds as if this is a one off, I would expect the agent to want cash up front, in which case the work has not yet started? On an accruals basis I could argue that if the work starts after 31 March / 5 April it falls into 2022/23. On the other hand, the need for the work has been identified and at this year end the liability is known so you could accrue it into 2021/22 even if paid later.

I'll get my coat ....

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