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Expenses for the property rental business

21/09/2017 12:17:42
Hello!

I have 2 questions about allowable expenses before property was let and how to bring them from the previous year into the tax return.

Situation:

1. I replaced windows and skirting boards before I started renting my flat. During that time the property was empty ( I did not live there).
All work was done in the tax year 2015-2016; and all the receipts for this work are from 2015-2016 tax year.

My first tenants moved in to the flat only later in 2016, which will be in 2016-2017 tax year.

After I listened to the HMRC property webinar, I believe that I can claim the repairs/replacements that were done in the property before my first tenants moved in.

My questions:

1. Could you please confirm that I can claim repairs (windows and skirting board replacements) that had been completed before my first tenants moved in to the property.
2. Could you please explain how I can submit my costs for these repairs into the tax return:

Can I submit my replacement/repair costs in the 2016-2017 tax return ? (directly into the field "losses brought forward from previous years)

Or do I need to go back and amend my tax return of 2015-2016 first and only then carry forward these expense to the 2016-2017 tax year as a loss?

Thank you advance for your help!
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Expenses for the property rental business

21/09/2017 17:00:10
If the property could have been let in its existing state before the repairs but they make it better, the expenses may be claimed.

You bring them in on the first day of letting so you just include them as repairs in the profit and loss in 2016/17. You don't show it as a loss brought forward.
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  • Catherine Newman
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Expenses for the property rental business

21/09/2017 17:02:52
I don't know why I came up as anonymous! Now logged in as me.
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Re:Expenses for the property rental business

25/09/2017 14:12:21
Hi

1) Usually the rental business begins when the letting first commences and allowable expenses incurred before the rental business begins may be claimed under the provisions for pre trading expenditure. Please refer to the following link that will assist you further for expenses that are incurred before rental commences- Property Income Manual 2505.
In respect of repairs and maintenance please refer to the following link- Property Income Manual 2020. Please note that repairs are normally a revenue expense and can be deducted from the rental income. However capital expenses are generally not deducted from the rental income.

2) If you are completing a paper return then you will complete the SA105 UK Property page and you will make an entry for repairs in box 25 on page UKP2 under “Property expenses”. If you are completing the return online then you will tailor your return on page 1 of 3 and say yes to “Did you receive income from UK Property”. Go to “Fill in your return” and complete the highlighted UK Property page. Go to the heading “Expenses for other property income” and enter the total expenses in the appropriate box.

You will enter the expenses in the 2016/17 return as advised. Please note that you will not enter the expenses in the “Losses brought forward for previous years” field and enter expenses as above.

No need to amend the 2015/16 return. If you are in a loss situation for the year 2016/17 then you can carry the loss forward to 2017/18. Please refer to the following link- Property Income Manual 4210.

This message was edited 1 time. Last update was at 08/08/2018 10:19:24

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