expenses

[par2par]

Hello, I'm sure this has a simple answer! I'm doing my Self Assessment for 2010-2011. During that year I had spent about £6,600 getting a flat I own ready for letting and only let it, as it turned out, for 3 months -- so the expenses were much greater than the income from rent. My question is: do the allowable expenses I incurred when preparing the flat count against my employment income (I am a self-employed editor) as well as my rental income?

Thank you.

[King_Maker]

No.

The loss can only be carried forward against future profits.

[nikkisizer]

Hi par2par,

No, the two forms of income have to be dealt with separately i.e. rental expenses deducted from rental income and self employed expenses deducted from self employed earnings.

[Peter D]

Had you let the property prior to the refurb of after. Regards Peter

[par2par]

Thank you very much Nikkisizer. Just to be sure that I understand you, are you saying that the allowable expenses incurred in connection with the flat ONLY reduce my taxable income from rental and have no bearing on my taxable income from editing work? I was hoping (naively, perhaps!) that, in calculating my tax bill, HMRC would ultimately lump together all my income (from property rental and editing work) and then set all my expenses (connected with rental and editing) against it to arrive at an overall figure for taxable income. Is that wrong?

Thank you - I'm gradually getting to grips with this!

[Peter D]

I'll try again :
Had you let the property prior to the refurb of after. Regards Peter
Regards Peter

[par2par]

I'll try again :
Had you let the property prior to the refurb of after. Regards Peter
Regards Peter

No.

[par2par]

I'll try again :
Had you let the property prior to the refurb of after. Regards Peter
Regards Peter

Apologies, Peter: I meant, No I hadn't; it was let after the refurb.

[Peter D]

http://www.hmrc.gov.uk/manuals/bimmanual/BIM46906.htm
http://www.hmrc.gov.uk/manuals/pimmanual/PIM2505.htm
It all depends on the history of the property, did you live there, the type of the expenses etc. etc. They may all come under capital and you account for them when you sell the property. Read the two links carefully and post back your thoughts. Regards Peter

[par2par]

http://www.hmrc.gov.uk/manuals/bimmanual/BIM46906.htm
http://www.hmrc.gov.uk/manuals/pimmanual/PIM2505.htm
It all depends on the history of the property, did you live there, the type of the expenses etc. etc. They may all come under capital and you account for them when you sell the property. Read the two links carefully and post back your thoughts. Regards Peter

Thank you for the links, Peter.

I can see that "allowable expenses" connected with rental properties are defined technically by HMRC (e.g. that repairs differ from acquisition-of-asset costs, and that quite when, in the process, an expense was incurred is relevant). However, I think my question is quite a lot more basic: do the allowable expenses I incurred in connection with the flat ONLY reduce my taxable income from the rental itself and have no bearing on my taxable income from editing work? I assumed that all my income (from both property rental and self-employment) would be put into one pot (so to speak), and that then my total expenses (from both the rental and self-employment) would be set against it to arrive at an overall figure for taxable income. Is that incorrect?