Search the Community

Hi All, I wonder if anyone can advise on the rules when it comes to renovating a property after purchase and offsetting some of those expenses against tax. It was always my impression after reading a few books and articles on the subject over the years that we would not be allowed to claim for ANY expenses incurred whilst renovating or preparing a property before it was let for the first time. This last year however, after being bombarded with emails from HMRC, I decided to brush up one what's allowed using the Inland Revenue resources and that seemed to suggest that any expense was allowable so long as it was maintenance and not an improvement. So for example if I buy a house which is perfectly liveable and in a condition which would easily rent but I decide to decorate top to bottom first before I let it out can I then claim those decorating expenses and off set against tax? What I read seemed to suggest that was allowed but I have never claimed that in the past thinking that nothing was allowed up until the point I first let the house out? Can anyone confirm? If it is allowable expense does that then stretch to renewing existing shower for example or kitchen worktops or getting the boiler up to standard and replacing radiators like for like? The inland revenue advice seemed to suggest that any like for like replacements could be claimed as long as you weren't for example fitting a shower where there wasn't one before or making the kitchen bigger or fitting central heating where previously there wasn't any (improvements). This would potentially make a nice difference to our tax bill but having never claimed it before it seems almost too good to be true (ie fair!). Have we been doing it wrong or have I misinterpreted the rules?! Would really appreciate if anyone knows for sure and be interested to know what other people are doing? Thanks in advance!

Hi I do all the admin for a single property my partner owns and lets privately and i'm just trying to make sure i'm looking at things correctly. It was his residential home previously. In preparation for letting it, many repairs were done in the months beforehand. New kitchen as the existing one was handmade. New boiler as the existing one was 27 years old. Refresh of decor and flooring etc. It was in a livable and lettable condition, but as he was going to be moving far away, he wanted to make the property as reliable as possible. The boiler and kitchen were large jobs as the location and pipework of the boiler did not meet modern regulations. The layout of the kitchen remained the same, but in order to access the gas pipes to replace them with the correct ones, the handmade units would have broken apart whether we had intended to replace the kitchen or not. He also had to replace the freestanding electric cooker twice as the original only had one of the two ovens working and then he accidentally smashed the ceramic top of the first replacement while doing other work, requiring another one. From reading other threads I concluded that these would be allowable under revenue costs rather than capital (please advise if this is not the case). Some of the large costs were incurred in the 18-19 tax year, but were undertaken specifically for the purpose of getting the property ready to let from April 2019, but, due to an unexpected delay in the purchase of the onward residential property, wasn't able to be remortgaged to an interest only BTL until July 2019 and let until August 2019. His personal self employment income was £31k for 18/19 filed by an accountant as he needed it to be certified for the mortgage applications. He did not have any personal income in the 19/20 tax year until employment in September 2019 and has received his p60 for 19/20 with an income of £12k and paye tax paid of £1200 as some weeks he got a bonus. He undertook associated training and qualifications over July and August 2019 amounting to £2500 in personal employment expenses. My question comes in whether ALL the repair / replacement costs as well as the normal recurring allowable expenses (management & referencing fees, mileage, RLA membership, 20% of mortgage interest ...etc.) incurred leading up to and during the tenancy up to April 2020 should be apportioned to the 19/20 accounts for the property, and if so, the result will be a very large loss (Circa £8000 loss), which makes no difference to his tax liability in 19/20 as he is already below the threshold. Or, can an accountant alter his 18/19 self assessment to include the large startup costs incurred in that tax year, where the allowance will actually have an effect on his tax liability? If not, would declaring such a small self assessment income for 19/20 (overall +£1500 for the year!) negatively affect his ability to remortgage both the BTL in July 2021 and his Residential mortgage in July 2024? His previous SA302s that the mortgages were calculated on were 29k, 30k and 31k from self employment before he relocated. There has been no late payments and no bad debt despite things being a bit tight as most of the expenses were paid from savings. He's currently employed rather than self employed, so would they just take 3 months wage slips and ensure the rent was 1.25x costs at the time of remortgaging rather than looking at the previous tax years? If the negative effect would be worse than the benefit of declaring the loss would it be better to try and switch as much of the expense to capital even though he wouldn't be planning on selling the property for at least 15 years, if ever. Just want to make sure whatever we do now won't cause more problems down the line. Alternatively, is there any way to spread these startup costs across future tax years instead where the allowance would have more of an impact on tax efficiency as working full time for the year 20/21 should have an income of around £23k as his hourly wage went up after 6 months and there will be a whole year of employment. Additionally, there would be a projected profit from the rental property of about £4000 after allowable expenses for the year, assuming no void period. I appreciate there are a few different queries here, but any insights are welcome

I will give a short summary and eager to hear your thoughts about how to be smart about how to fund my company. I am a Swedish citizen (living in Sweden) setting up my UK LTD and have understood that expeses can be deductible even if the occured prior to the launch of my company. BUT if I have had eligable and deductible expeses of 1000 pounds (personal and taxed money), that 1000 can only be deducted against revenues to reduce my corporation tax. Which means I "save" 19% (190 pounds). Still that 190 pounds will have to be taxed (personal income or similar based on our Swedish rules) prior to being cash in my pocket = my 1000 pounds spent on my company will only be paid back at around 10-20% (bummer..). Am I missing something here? After realising this I want to keep my expenses to a minimum whilst funding the company in an efficient way. Question: Can I make a directors loan on the day of incorporation charging NO interest and then pay back that money (potentially when selling a property in the future or when refinancing using a mortgage) without having to report anything to the HMRC relating to the directors loan (form CT61) as there is nothing to report because I do not charge any interest? I of course have to do my accounting, annual reporting etc as per the requirements. The idea is of course to fund the company but also try to make sure I can get my already taxed money back.. Would really appreciate your comments and If I am completely wrong here or if there is a better way? Also, if it is not a directors loan but I am borrowing from other investors, I would not need to fill in the CT61 or anything else even if paying interest, is that correctly understood? (Again, just do the accounting correctly). Appreciate your comments and thoughts! Best Regards, Jakob

I just started out renting my property in this financial year as a BTL. However, can I claim back expenses on things that occurred in previous tax year, such as building maintenance costs, repair costs, or property books & subscriptions, even though the property was not rented out in previous years? and if this is possible, how many years can I go back when doing my tax return? Also, when I changed my mortgage to a BTL this year I incurred solicitor fees and search costs as part of my re-mortgage to BTL. Can these costs be deducted as expense from my tax bill? Many thanks for your help in advance.

Dear Hubbers HI, I'm a HMO newbie and grateful for your advice. I've got a 6 bed HMO , 2 storey in the works . All bills will be included. I've got myself a bit confused with the type of thermostat arrangement to set up. Should I just have a single thermostat in a communal area , one on each floor or one in each room ( super pricey to set up) I'd really appreciate advice on how to keep bills down whilst making sure everyone is comfortable . Having a thermostat in each room seems like the most comprehensive solution but its the most costly. Any advice on an easy -to -use brand which has worked for you and thermostat strategy would be gratefully received. I appreciate your time Hubbers!

Hi guys, just a quick few questions on tax that come up less often. BTL insurance claim, if you claim on your insurance for damage to a BTL property, do you claim the insurance payout as income and claim any contractor repair costs as expenses or do you claim neither as its an insurance payout rather than earned income? If you withhold some or all of the deposit due to losses of time, work, rent, damage or whatever, either for actual contractor costs or for your own time and hard work to clean and repair etc, does this need to be claimed as income or not as the deposit is actually to counter act your losses? Many Thanks Scott Child

Hi, can you claim food or meals as an expense as a landlord? Thats the main question and now for a bit of specifics. i know the wholly and exclusively thing. You can claim travel expenses such as 45p per mile for travel (up to 10k miles). I’ve read in many places that if visiting a property that requires an overnight stay then the stay and meals are deductible as long as the stay is ‘wholly and exclusively’ for attending the property. In my specific case that I'm questioning, my rental properties are an hour to an hour and a half drive away. Ive recently purchased another BTL that requires the usual pre rental visits to take meter readings, change the locks, tidy the place up, repair minor issues ‘without improvements’, maybe a lick of fresh paint and visit local letting agents etc etc. During all of this I must have driven there maybe 10 times. I shall claim mileage but due to being away all day ive had to buy for lunch and/or dinner ‘cheap’ quick meals like tesco meal deals, mcdonalds or whatever. Can the costs of these foods bills be claimed? I believe they can, im only there for business reasons, I’m having to eat out due to not being at home solely for business reasons, they aren’t overly expensive like 5* restaurants with drink etc and are reasonable and all others costs of being there are deductible such as mileage, parking costs and repairs. Many Thanks for a response guys I know this should help a lot of people. Scott Child

Hi, I replaced the existing worn carpet in my new rental last year which cost me £3k, and along with other repairs to make the place rentable I have a total of £4k expenses to claim against my tax. However the HMRC online tax has highlighted " WARNING: This figure is high in relation to 'Total rents and other income from property' ". I've gone through the claimable items and the only possible questionable one is whether the carpet is a capital expense. To me this is a like-for-like replacement, therefore claimable, but am I wrong? Thanks Dave

Hi all I am currently in the process of renting out a house I have previously lived in for 5 years. I have carried out 'maintenance' on the property regularly, not made substantial improvements to the property, i.e. No extensions or layout charges but more decoration, carpets, wall tiles etc. I have fitted a new bathroom suite (but again not ‘improved’ the suite beyond how the original would have looked when it was new). I am aware that in the first year of your “property business” you can go back and claim any expense from 7 years prior to starting. But I don't know if that extends to work done on your private home which I have had a benefit from but has subsequently become part of the business. As I have rented out my previous home in my own name, not a limited company for instance, can this still be classed as a “property business”? And how far back can I go with regard to offsetting expenses against profits? Is there further guidance on this? Thanks Grant