Buy to let

[jayhay]

Just bought a buy to let which will be declared for the first time in my 2011/2012 self-assessment. Sorry to ask such basic questions

Do I have to pro rata the rent and the allowable expenses on the basis of the specific 365 days of the actual the tax year, or do I just declare rent and allowable expenses which actually occur between 6 April 2011 and 5 April 2012, even though they cover a portion of both the 2011/2012 and the 2012/2013 tax years

For example I have to pay a full year’s service charge of £800 on 1 January 2012. Can I charge the full £800 to the 2011/2012 tax year or must I count the number of days the flat was rented in the 2011/2012 tax year and pro rata the £800 service charge to match the actual rental days of the 2011/2022 tax year.

The same question applies to the year’s ground rent and building insurance which also falls due on 1st January 2012.

[mullet]

You declare the rental income on an actual basis - i.e. for the tax year. But you declare the rent earned, not the rent received. So if you receive any rent in advance or arrears you need to make an adjustment. And yes, you apportion expenditure in a similar way. So for instance you would claim 3/12 (whole months will do, you don't have to use days but you can if you wish) of the 01-01-2012 service charge in 2011-12. In 2012-13 you would claim 9/12 of the 01-01-2012 service charge and 3/12 of the 01-01-2013 service charge.

[robbob]

Providing the turnover is "small" (under 15k) and the results are broadly equivalent using both methods then HMRC will generally be happy if you choose to use a cash basis (money in and payments out)- see the following link for full details of requirements to be met for this concession to be applicable.
http://www.hmrc.gov.uk/manuals/pimmanual/PIM1101.htm