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Arrangement and broker fees - allowable expenses or not?


steely3

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Hi guys,

 

I was seeking some clarity as to whether arrangement and broker fees are tax deductible as allowable expenses or if these would be classed as capital deductions when selling a property?

 

I have researched the net and continually find myself seeing varied opinions as to whether these are classed as 'allowable expenses' or not.

 

Thanks!

 

 

 

 

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  • 3 weeks later...

Hi Steely3

 

I'm not a qualified accountant, but all points indicate yes in terms of being allowable. 

 

Here's a link to the HMRC Property Rental toolkit - the 2016/17 year, section 8 (page 16) - "The incidental costs of obtaining finance that are wholly and exclusively incurred for the purpose of acquiring the property are normally allowable. Mitigation Consider whether any legal or other professional fees have been incurred relating to property. Ensure that these costs are allocated appropriately. For further guidance see PIM2205 and BIM45815."

 

I'm sure an Accountant on here can confirm yay or nay.

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Thanks for your response Derek.

 

That’s how I would interpret this subject as it is costs relating to ‘obtaining finance’. However, it is quite ambiguous on the HMRC website and is open to a variety of interpretations.

 

Kris 

 

 

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Yes, I have done this one as well!  I claim this as a revenue expense on my annual return as this is when the fee has been paid (even though its added to the loan.  The tricky thing sometimes is that you don't sometimes have a receipt for this.  I have in the past, simply included a copy of the mortgage offer, or it may appear on the mortgage statement (which may mean a delay in claiming)  I now ask my broker to produce a receipt for all finance costs incurred, including their broker fees and also the lenders fees.  

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