Expenses incurred in the running of a property letting business are deductible from rental income received in calculating the taxable profit. However, just because a payment has been made, it does not necessarily mean that it will be allowable.
Strictly, for an expense to be allowed the business purpose must be the sole purpose; there must be no dual reason for the expense. Where it is difficult to split the business element from any private element then the whole expense amount is usually disallowed.
In practice, however, some ‘dual purpose’-type expenses may be permitted. The expense usually quoted is of expenses incurred on running a car used partly for business and partly for private purposes, the business part obviously being allowed.
Example:
James rents out his former main residence in Manchester whilst he is working away from home in Brighton. Every month he travels by car to Manchester to view the property. His mother lives in the vicinity and he sometimes combines the trip with a visit to his mother.
On these occasions all expenditure might be denied because of the ‘dual purpose’.
On the trips James undertakes for the sole reason of visiting the property, the costs incurred are allowable in full. The calculation of use of petrol is straightforward (see Tip 15). However, there will be ‘duality of purpose’ with reference to such costs as insurance and servicing. A proportion may be claimed, but an element would be disallowed as being incurred for personal use as James uses the car for reasons other than solely viewing the property.
This is a sample tip taken from our 136 page guide:
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