Allowable expenses that you can deduct from your lettings income

As promised last week, today we are going to discuss expenses and tax allowances that you can deduct from your rental income when you work out your taxable profit or loss. If you have several UK residential properties you let than you need to add them together in terms of receipts and expenses on the Land and Property Pages provided by HMRC. What you need to bear in mind is that you have to work out your holiday lettings and overseas lettings profits separately.
As i mentioned last week if you choose to use Rent a Room Scheme then you cannot claim any expenses.
The following allowable expenses are deductible in computing your rental business profits, provided they are incurred wholly and exclusively (omnipresent words in the Land and Property tax guides) for the purpose of the business:

• letting agent’s fee;
•utility bills like gas, electricity,water;
•rent which you pay to your own landlord for a property you are subletting;
•cost of insurance , whether of the building or of the contents;
•services you pay for like gardening or cleaning;
•Council Tax;
•maintenance and repairs, but not improvements;
•interest on property loans, provided they incur wholly and exclusively for the purpose of the business;
•accountant‘s fee;
•cost of rent collection;
•legal fees for lettings of a year or less, or for renewing a lease for less than 50 years;
•other direct cost of letting the property like advertising, phone calls and stationery.

So, if the tax on property income still leaves you in dark, Taxfile’s tax accountants can help you as a landlord get a better picture of it. Their accountants in South London will assist you with filling in tax forms, preparing your accounts and dealing with Inland Revenue on your behalf.