Reasonable miscellaneous costs for landlords tax returns

The mileage and benefit claims for business usage on a personal car I don't think add up to much at all, though it does depend on the mileage you do. If only you could claim it at 45p I don't think that is what my accountant does.

One word of warning about specifically designating part of your home specifically as an office and for business purposes. Apart from the fact it has to be exclusively so (I believe) the other issue is it can either cock up Council Tax and cause complications on sale, or planning or something.

As is evident from my posts I am no expert at all on tax matters, mainly because over the years in PAYE I have viewed from a distance how complicated self-employment can be!!

My turnover I doubt is £25K a year never mind my net profit. But my accountant charges £450, does the lot and as others have commented it is money very well spent. Depending where you are probably less than 50% of one month's net rental income on one property.

Use a professional

I charge 75% my motor running cost & 25% as private, 10% on Bank interest (as the account gets over drawn at times due to my personal expenditure) 10% on mobile & 10% wear & tear. I do not claim for light & heat, Council tax etc for my home as office

The above was done on a voluntary basis & the revenue accepted. Life is more that calculating mileage and apportionment of private use of one homes.

Please do not get carried away in claiming "use of home as office " as you would have to pay CGT on the claimed element, when you sell your private and principal residence.

Reply to the comment left by "shakeel ahmad" at "07/01/2014 - 17:34":

There are probably some things you could do that would improve what you can claim for. I suggest you contact an accountant.

You quote "The above was done on a voluntary basis & the revenue accepted". However, if you find yourself an accountant, HMRC will accept any reasonable expenses anyway. There is no need to negotiate with HMRC.

The mileage basis can sometimes work in your favour. However, each case is different.

Your last statement "Please do not get carried away in claiming “use of home as office ” as you would have to pay CGT on the claimed element, when you sell your private and principal residence."

In fact you can get a bit carried away with using your property as an office as you should know that you have personal CGT allowance of over £10,000 each year (£10,900 for 2013/14)

Reply to the comment left by "Industry Observer " at "07/01/2014 - 17:32":

@ Industry Observer

You can indeed claim at 45p a mile.

Please go to http://www.hmrc.gov.uk/rates/travel.htm

However, it does depend on your circumstances. Sometimes it can work out more cost effective, especially if you live some distance from your let properties and you have to travel to undertake maintenance for example.

You quote "One word of warning about specifically designating part of your home specifically as an office and for business purposes. Apart from the fact it has to be exclusively so (I believe) the other issue is it can either cock up Council Tax and cause complications on sale, or planning or something"

What you have said about the Council Tax is a false statement.

As for designating a bedroom or other room in your house, it will not have any impact whatsoever on the sale of your house nor planning. What you suggest is a fallacy.

I designate part of my property as an office with no problems.

This is standard practice.

When, I said voluntary I meant I elected & there was no negotiation involved. As I felt in my circumstances, my set up, distance to properties, type of tenants. This was reasonable.

I rather utilise the annual CGT allowance for gains on other assets as I do not feel the annual limit is very generous and specially as do not have the tapering relief.

Reply to the comment left by "shakeel ahmad" at "07/01/2014 - 20:12":

Shakeel,

Sure, you are submitting your own accounts through the HMRC online SA scheme.

With respect. and judging by your answers, you should speak to an Accountant anyway. There are likely to be expenses you are not claiming which you could claim.

CGT Taper Relief was abolished some years ago as you know.

I have never heard of HMRC pursing anyone for CGT for designating a room in their house as an office. So although I quoted the CGT personal allowance, I was stretching the point.

Designating a room in a house as an office is standard practice for many businesses. I have done this for many years and claimed allowable expenses in accordance with the law. Likewise I do not expect any CGT implications for such activity when I sell the property.

Reply to the comment left by "Richard Kent " at "07/01/2014 - 20:31":

@Richard, Thanks for your advise.

I do claim everything that I need to without pushing the boat. I feel that once one is the guideline of wholly, exclusively & necessarily is applied one is not far wrong.

Reply to the comment left by "shakeel ahmad" at "07/01/2014 - 20:46":

Sure,
That's a guide only.

However, you could be plesantly surprised by a visit to an accountant.

What you call "without pushing the boat" may be less than you are entitiled to.

Ensure you are claiming everything you are entitiled to.

You could save yourself many £100's in tax

Paying an accountant £450 to do one's accounts seems a lot of money to me, unless you have multiple properties. Doing a Self Assessment return including the Property pages is not difficult. Why not just spend £25 buying a book like Carly Bayley's How to Save Property Tax, which should cover everything a new landlord like Paul should need to know, unless he has unusually complicated arrangements.

Alternatively pay for some accounting advice one year, just to check you're not missing anything, and then do the SA return yourself for free in later years.

Some sample miscellaneous costs that I've claimed for are:
- maintenance repairs, including larger items like replacing a bathroom. Replacement work is deductible against income, but depending on your anticipated capital gains position it can be more tax-effective to hold back these costs to count against your capital gains when you eventually sell (make sure you keep all your receipts!). You can quickly run up a loss on income, which is no use at all when you come to sell and want capital deductions to reduce your tax bill.

- if you borrowed on another property, like your own home to raise the capital to buy your BTL property, the interest on this mortgage is deductible against your rental income.

- from 6 April 2012, all landlords can claim a flat-rate £208 p.a. for running a home office, without any comment by a tax inspector - see HRMC doc BIM 47805. For claims of more than £208, a landlord needs to gather supporting evidence, as discussed in previous posts.

- deduct for a subscription to the NLA or RLA; for key-cutting; for utility bills covered during void periods; for relevant books and training (e.g. by the NLA); for building and contents insurance; for any cleaning or gardening services provided by others; for advertising; for cleaning materials; for Landlord's Gas Inspection and boiler service - all receipted and invoiced.

- as others have pointed out, there's no point charging for your time, as your investments will thereby be paying you an income, on which you can then be taxed.

- use the Landlords Energy Saving Allowance, which allows you to deduct up to £1500 per property for insulation and other energy-saving measures. Useful if you are a 40% tax payer, but you may prefer to retain these to charge against future capital gains.

Paying a high street accountant £450 to do a simple property tax return possibly is excessive. I suggested seeking someone who specialises in property tax - my business actually has CAs as clients and our prices start at £150. If I didn't think I could save the average landlord that in tax - not to mention the peace of mind and freeing up of their own time - I wouldn't bother.