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Where Taxpayers and Advisers Meet

SATR - Deduction in March but repair in May.

bubu
Posts: 66
Joined: Wed Aug 06, 2008 3:24 pm

SATR - Deduction in March but repair in May.

Postby bubu » Thu Jun 13, 2019 1:00 pm

Hello,

I own and rent out a property in the UK. Some work was done in the bathroom in March 2019 which cost £165. The money was deducted from that months rental income from the letting agent.

However, the bath repair actually shows up in May's statement, as the actual work was done in May according to my letting agent, which is the new tax year. The revised sum for the repairs was £145, which is £20 less than originally taken off my rental income in March, hence I was credited £20 more in May, which is a different tax year.

I am now doing my 2018/2019 tax return. I want to know if the £165 deduction in March is tax deductible for the 2018/2019 tax return, or do I need to wait until 2019/2020 tax return offset this? According to my letting agency, the now £145 sum cannot be deducted for 2018/2019, as the actual work took place in May and that the £165 had been set aside in March and deducted in March from my rental income, but due to delays to the work, the work actually occurred in May and came in at £145. However, as far as I cam concerned, I received £165 less rental income in March and want to off set this loss for 2018/2019. Who is right?

Many thanks.

bubu
Posts: 66
Joined: Wed Aug 06, 2008 3:24 pm

Re: SATR - Deduction in March but repair in May.

Postby bubu » Fri Jun 14, 2019 7:08 am

Maybe I should simplify.

If money for a repair to my rented property was deducted in March 2019, but the actual repair was delayed and then carried out in May (new tax year), then in which tax year is the repair relevant?


I am doing my 2018/2019 tax return and I am wondering that as the money was deducted in March from that month's rental income, that it should be for the 2018/2019 tax return. My letting agents say otherwise. They say as the work was done in May, and work shows up on May's statement, it is tax deductible for 2019/2020. However, I paid for the repair, which was deducted from my rental income in March. Confused.

Many thanks.

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: SATR - Deduction in March but repair in May.

Postby Jholm » Fri Jun 14, 2019 9:12 am

Unless you have a particular reason not to do so, you could use the cash basis, meaning you would account for actual payments and deductions in the tax year (basically as per Apriol to March letting statements).

This varies from the accruals basis, which unless you know what you are doing, can get messy due to adjustments and 'crossover' between tax years.

pawncob
Posts: 4374
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: SATR - Deduction in March but repair in May.

Postby pawncob » Fri Jun 14, 2019 5:38 pm

If you suffered the deduction in 2018/19 then it's allowable in that year.
With a pinch of salt take what I say, but don't exceed your RDA

bd6759
Posts: 3107
Joined: Sat Feb 01, 2014 3:26 pm

Re: SATR - Deduction in March but repair in May.

Postby bd6759 » Fri Jun 14, 2019 5:55 pm

The letting agents dedcuting money to cover a cost is not in itself an expense. It is you reimbusring them for the cost that they met on your behalf that is the expense.

If you are using the cash basis, you account for it when the contractor was paid, otherwise you account for it when you became obliged to pay the contractor. The date you gave money to the letting agent is irrelevant.

HMRC are not going to argue with you over the timing of a £165 expense.

bubu
Posts: 66
Joined: Wed Aug 06, 2008 3:24 pm

Re: SATR - Deduction in March but repair in May.

Postby bubu » Sat Jun 15, 2019 9:01 am

Thanks for the information.

I think that seeing as I docked the £165 in March, despite the repair occurring in May, I will claim relief on this cost for the 2018/2019 tax return.

However, I notice the final bill was £145 and I got £20 extra in May's rent. Will that make any difference?

Thanks

bd6759
Posts: 3107
Joined: Sat Feb 01, 2014 3:26 pm

Re: SATR - Deduction in March but repair in May.

Postby bd6759 » Sat Jun 15, 2019 7:25 pm

Your cost is £145.

bubu
Posts: 66
Joined: Wed Aug 06, 2008 3:24 pm

Re: SATR - Deduction in March but repair in May.

Postby bubu » Sun Jun 16, 2019 3:41 am

Thanks for the replies.

Total cost is £145. So would I claim £165, as that is what I was deducted for the repair in March, (2018/2019) but then add the £20 that was added to my rental statement in May, (2019/2020) to next year's tax return rental income figures. Wouldn't that be easier and more accurate?

Many thanks.

bd6759
Posts: 3107
Joined: Sat Feb 01, 2014 3:26 pm

Re: SATR - Deduction in March but repair in May.

Postby bd6759 » Sun Jun 16, 2019 12:58 pm

Wouldn't that be easier and more accurate?
No. It what way is it easier or accurate to put in an incorrect amount one year and a negative correction the following the year? If that were remotely possible and accurate, I'll claim a £10,000 expense this year and correct it next year. It will help with my cashflow meantime.

The cost of the repair was £145. The repairs cost you £145. £145 was the amount spent on the repair. The repair man wanted £145. The repair man was given £145. Putting down any amount other than £145 is wrong. £145 is the correct figure.


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