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Expenses incurred in the running of a property business will have been spent in order to generate income and as such can be deducted from income received during the year.

When the letting ceases there will be no income against which relief can be claimed.

However, by ensuring that any expense is accrued (allowed) for, tax relief is available; the crucial factor is not when the expense is paid or the date on the invoice but when the need for the expense arose.

Expenses:
Last year Tony rented a property to a couple who left suddenly without giving notice. When Tony entered the property he found it in need of substantial redecoration and repair. A couple of weeks later a reminder for an unpaid electricity bill arrived. What expenses can be claimed?

Damage to property – as the property had been damaged whilst the property was let (or available to let) the expense of repair can be claimed.

Electricity bill – the bill is not Tony’s legal responsibility but if he is unable to find the whereabouts of the previous tenants he will have to pay in order for the electricity supply not to be cut off. The expense is a cost of the letting and is therefore allowable.