Category: Finance & Accounting

cheap accounting hounslow

How to Cost-Effectively Manage your Accounting Division?

cheap accounting Hounslow: Competition across the globe has been intensifying at an increasing pace over the course of time. In this regard, businesses in the modern-day and age are more vigilant about their cost centers. In order to ensure that they are not overspending, and are able to stay within the desired budget. Speaking of Hounslow, it is a major metropolitan center, and therefore, hosts a large number of businesses. The business trajectory in this area looks promising, which is evidently mirrored in the increasing number of businesses that have established over the course of time. However, businesses striving to save costs. There are a number of ancillary services that can outsource. This delegation helps the company to save substantial costs and manage their resources much effectively. 

Accounting tends to be one of the most important functions of a business. Given the high degree relevance it holds for the stakeholders of the business, So it needs to be taken care of in a proper manner. This can be done either by hiring an expert accountant in this field or by hiring an external company to manage accounting and relevant bookkeeping for the company. With whatever options the company chooses to opt for. There are certain additional strategies they can deploy in order to save costs.

cheap accounting hounslow

Cash Discounts and Trade Discounts:

From a business perspective, discounts are extremely important as they help the company to accumulate unprecedented income over the course of time. During the normal course of the business. Companies can try getting into long term contracts with their suppliers, in exchange for cash discounts. This is mostly done through negotiations and solid networking. 

Payroll Processing:

Payroll Processing is one of the most crucial and time-consuming processes within the accounting division. It becomes by using numerous companies that handle HR and other HR-related matters.

Accounts Receivable Management:

Debt Factoring tends to be one of the most popular methods of recollection for companies across the world. Organizations across the world use this strategy to maintain their liquidity. And reduce the cost of debtors not honoring their commitments. Hiring a specialist for purposes of debtor account management and recovery can often prove to be increasingly costly. Alternatively, companies can sell their debts to other companies, to reduce their inherent risk involved. 

Process Automation:

 

Process Automation in accounting has greatly helped companies save substantial costs, and generate reports at a quicker time interval. Using tools, like QuickBooks, and other software, can greatly help business owners to save money, and generate better results without having someone on their payroll do this for them. 

Therefore, cheap accounting in Hounslow is no longer far-fetch. With proper management of resources and the correct execution strategy, organizations can achieve the desired KPIs (Key Performance Indicators). In most cases, this achieves by outsourcing the entire division to a specialized company, which covers all aspects of accounting under one roof.

Accounting In Hounslow

What To Look For When Hiring An Accountant In Hounslow?

Recruiting employees can be one of the most integral functions of any organization. Recruitment is a costly function, and organizations need to consider a number of functions to ensure that they are able to take the right decision in this regard. Even for ancillary departments in a business, like accountancy. It can be seen that recruitment should be considered as an extremely important component. As far as Hounslow is concerned, it has recently seen a surge in new companies being formed. With a subsequent increase in business for ancillary companies. Similar has been the case for accounting companies in the region. However, deciding on the right accounting partner is often a difficult choice to make.

Here are some tips and tricks, which business owners should take into consideration when finalizing their partner for a subsequent year. 

Credentials:

It is extremely important to ensure that business owners are able to account for the credentials of the accounting firm (or individual). They are contracting with. It is important because of the reason that it helps the company to have reasonable assurance that the people taking responsibility for the particular job are experts in their fields. They can ensure that there are no issues pertaining to compliance or other miscellaneous matters. Furthermore, this can also add credibility to their investors or their creditors. Because they would know that the organization is getting their books prepared from a well-reputed company. 

Reviews:

Reviews and recommendations are one of the most reliable and safe methods that can be used for hiring purposes. In the case where the company is looking to hire external companies. It is often a good idea to look for other clientele the company has. This can greatly help the company to make sure they make the right choice and ensure a cordial working relationship. 

Accounting in Hounslow

Industry Experience:

Industry Experience tends to be a very crucial determinant when making a selection for an accountant. This is because different industries have accounting and bookkeeping of a different nature. Therefore, it is always an advantage to hiring an accountant who can have relevant experience. So that there are lesser chances of any errors. 

Flexibility:

Businesses these days are opting for flexibility across all their business operations. Hiring an individual, and carry out a number of functions for the company is often a good idea in this regard.  Alternatively, hiring external accountants who can provide flexibility with payments, and other related services (like invoicing), can also help the company save costs, and avail a larger pool of services.

The factors mentioned above are some of the most important factors which should be considered by companies hiring accountants in Hounslow, and all across the world. These factors can greatly help companies make an informed decision about the contract they are signing so that they are able to extrapolate a greater service protocol, which can be reflected in their well-kept books, and accounting systems. 

Benefits of Hiring Hounslow Accountants

Benefits of Hiring Hounslow Accountants

As soon as you start a venture, you’ve to journalize transactions. Whether it’s sales, purchases, salary payments, expenses, or other items, keeping accurate records is imperative. If you fail to journalize a single transaction, your business could be in the doldrums. This is even more correct if the transaction relates to sales or purchases. So, how do you avoid any such problem? Your best option will be Hounslow accountants. These professionals can handle all issues related to bookkeeping and accountancy.

Benefits of Hiring Hounslow Accountants

Why hire Hounslow accountants?

When it boils down to accountancy, many small business owners follow a DIY approach. In addition to managing production, sales, purchases, they try to maintain their business books. Unluckily, most of them finish up with erroneous recording, missing entries, and other problems. Consequently, they fail to get a clear financial picture of their venture. Some businesses sustain huge losses due to missing or erroneous records. The truth is accountancy isn’t a DIY task. Rather, it warrants professional expertise. Here are the important reasons for hiring an accountant.

Saves time

Recording business transactions can eat plenty of time. This is even more correct if you’ve to journalize hundreds of entries each day. Making journal entries, preparing the ledger, and sorting out financial statements can take a heavy toll on your business life. Today, time is scarce and extremely important.

Are you willing to expend time on accounting? Obviously, no! It’s best to outsource the task to expert Hounslow accountants. No matter the number of transactions, these professionals will take care of your accounting chores. You may use your precious time for other core activities of your venture.

Accurate records

When it comes to accounting, accuracy matters most. You can’t make decisions based on faulty records. If you keep accounts on your own, you may miss out on important things. When this happens, your financial statements won’t reveal a true picture. Consequently, you can’t take proper decisions for your business.

Outsourcing the task averts all such issues. Professional Hounslow accountants possess the expertise and knowledge in keeping books as per set accountancy standards. Plus, they’ve relevant experience in handling all sorts of business transactions. As such, you can be sure that your accounts will reveal a clear, true picture of your business finance.

Management of business assets

Experienced Hounslow accountants can play a key role in the growth of your venture. Besides keeping books, they’re trained to tackle all kinds of management risks. When you’re away, your accountant can manage your business operations and employees. These professionals can tender help with the control and management of the business property.

They’ll audit your assets and oversight the proper usage of your business property. On top of that, they could offer valuable insights into investment decisions. Using their knowledge and experience, you could make profitable investment decisions.

Accountant in Hounslow

Help with taxation

Filing taxes on time is necessary. If you fail to pay correct taxes, you’ve to bear fines. Also, you could face legal issues in due course of time. To keep such problems at bay, many businesses hire a tax professional. A tax professional calculates and files taxes based on your financial records. If the accounts are faulty, you’ll end up paying too much tax.

If you pay less tax, your accounts will be scrutinized. Furthermore, you’ll have to pay hefty penalties for evading tax. Reputed Hounslow accountants avert such issues. First of all, they’ll provide error-free records, thus avoiding fines. Secondly, they’ll file your taxes and guide you on tax planning. You don’t have to appoint a tax professional. It’s a win-win situation for you.

Affordability

Many small businesses never consider the services of an accountant fearing the high rates. However, their fears are mere myths and assumptions. Many reliable Hounslow accountants render their services at a reasonable charge. Plus, a quick look at the cost-benefit ratio reveals that choosing an accountancy expert is a far more affordable option.

Bottom line

Hiring an accountant is imperative for any business, small or big. If you follow a DIY approach, you’ll lag. Also, you’ll wrap up with a huge failure. Employing an accountant lets you avert such problems. Plus, you enjoy a series of perks through an accounting professional. Error-free accounting, asset management, help with taxation, affordability, etc. are the main advantages of hiring a bookkeeping expert. This is why successful businesses prefer a reliable accountant by their side. If you wish to enjoy accurate business records and run your venture smoothly, turn to qualified Hounslow accountants and see the difference.

Modern Day Accounting in Hounslow

Accounting tends to be one of the most crucial factors for any business. This is essential because of the reason that this particular business function gives much-need insight into the overall performance of the business so that better-inform decisions can take subsequently. As far as Hounslow is concerned, it has seen a sharp increase in small businesses over time. This is a reflection of the overall paradigm shift which helps individuals to awaken the entrepreneurial spirit and start their venture. However, a considerable number of entrepreneurs then struggle with their accountancy division. Since they find it difficult to manage their finances. This problem can solve by hiring external accountants. This solution tends to be viable for several reasons.

Modern Day Accounting in Hounslow

Cost-effectiveness:

Hiring external accountants tend to be much cost-effective because companies that offer accounting and bookkeeping services for other clients have several clients. Therefore, this outsourced bookkeeping service can help them manage their accounts at a cheaper cost, without worrying about adding a permanent employee in their payroll. 

Compliance: 

External Accountants are experts in their relevant fields. Therefore, they are well-aware of matters about compliance with the local law. This saves the company from taking legal consultation, on matters about issues like Company Tax, and VAT. From the perspective of an investor, or a creditor, this can be a very positive aspect. Since they know that the books have been prepared by the required standards, and therefore, they reflect the financial position of the business truly and fairly. 

Record-Keeping: 

The importance of record-keeping, for any business, cannot be understated. This is because this gives very useful insights about the expenses that have been incurred throughout the business, including all the payouts that have been carried out. Doing so can ensure that business owners have proper clarity regarding expenses that need to be controlled so that they can set budgets accordingly. This again, reduces any chance for error, for fraud, when preparing the financial statements at the year-end. 

Modern Day Accounting in Hounslow

Decision-Making Analysis: 

Hiring external accountants can act as an aid for business owners. Since they can get reports and other relevant data that can help them make decisions. There are a lot of accounting and finance concepts, that are only known by experts in the domain. For example, Capital Budgeting Analysis tends to be one of the most important decision-making tools for any business. An external accountant can help the business owner make an informed decision by sharing calculations including payback period, Net Present Value, and IRR. 

Therefore, hiring an external accountant can be extremely vital for a business. Because of the advantages, it reaps for small business owners. Particularly in the case of the smaller companies, and their woes about hiring accountants in Hounslow. It can be seen more of an investment, as opposed to a Fixed Cost. Because the value addition that can be obtained via an external accountant outweighs the respective costs. 

Accountant in Hounslow

Accountant in Hounslow

The growth of accountancy as a division has exponentially increased over time. This is predominantly because the reason that they need to have proper bookkeeping arrangements cannot be emphasized enough. Therefore, there is a need for organizations, regardless of their size to ensure they have proper accountancy divisions for all record-keeping purposes. Analyzing the growth of accountants on a geographic basis, it can be seen that the growth trajectory has been quite promising in and around London. Hounslow for one has seen an increase in outsourced accountants over time. The reason for increasing traction for an accountant in Hounslow can associate with numerous reasons, mainly vesting on grounds of increase facilitation for customers. The reasons can broadly summarize as follows.

Accountant in Hounslow

Business Tax: 

For any business, regardless of the size of the operation, taxation can be one of the most confusing and intimidating and intriguing factors. Outsourcing accountants in Hounslow can release the business from the hassle of taxation policies, and ensuring that their compliance is as per the required standards. Therefore, it saves the business from considerable hassle, as mostly outsource accountants in Hounslow are experts in this domain. As far as Hounslow is concerned, Accountants in Hounslow are fully equipped to deal with matters about business tax, so that the need for hiring external tax lawyers becomes redundant.

Payroll: 

Payroll management is one of the most crucial factors within the accounting stream. It can be quite difficult to manage because of the bulk work involved. And attention to detail that requires as part and parcel of the calculations. However, having properly qualified accountants in Hounslow can help businesses to manage this division for them, at a much competitive cost.

Affordability: 

Given how modern-day businesses are structured, organizations are aiming to be leaner, and more flexible. Therefore, they are adamant about stacking up overheads that might take a toll on their financial positioning. From an accountancy perspective, it might be costly for them. To hire an accountant or a team of accountants in Hounslow on a monthly retainer package. However, outsourcing this to specialized accountants can significantly reduce costs for business. In particular, Accountants in Hounslow are nominally valuable, to ensure that companies, regardless of their size can afford them without taking a strain on their pockets.

Flaxibilty Accountant in Hounslow

Flexibility: 

Mostly accountants in Hounslow are quite flexible with their clientele. They work with businesses across all industries, regardless of their size, or financial volume. Therefore, this enables corporations to avail of these services, and benefit from these services. This flexibility also helps companies to save money, time as well as resources.

Conclusion

Therefore, if hiring a professional accountant in Hounslow, either on-site or off-site. It can prove to be helpful for business owners (and other stakeholders) to enable them to make good decisions. Additionally, with the overall virtues associated with hiring specialized people for the job. It can also be concluded that it proves to be cost-effective in the longer run.

What to do if you need to change your tax return

You made it and filed your self-assessment return for 2018/19 by the 31 January 2020. However, having felt pleased with yourself, you realise to your horror that you have made a mistake and need to correct your return.

Can you do this and if so, how and by when?

Yes, you can

If you have made a mistake on your return, for example entered a number incorrectly or forgotten to include something, all is not lost. As long as you are within the time limit, the error can be corrected by filing an amended return.

How?

If you are in time to file an amended return, the process that you need to follow will depend on whether you filed your return online or on paper.

Online returns

If you filed your return online, you simply amend your return online. To do this:

  1. Sign in to your personal tax account using your User ID and password.
  2. Once in your account, select ‘Self-Assessment Account’. If this does not appear as an option, simply skip this step.
  3. Select ‘More Self-Assessment details’.
  4. Choose ‘At a glance’ from the left-hand menu.
  5. Choose ‘Tax Return options’.
  6. Choose the tax year for the year you want to amend.
  7. Go into the tax return, make the changes you want to make, and file the return again.

Remember to check that it has been submitted and that you have received a submission receipt.

Check the revised tax calculation too in case you need to pay more tax as a result of the changes, but remember to take account of what you have already paid.

Paper return

If you opted to file your return on paper by 31 October 2019, to make a change you will need to download a new tax return. This can be done from the Gov.uk website. Fill in the pages that you wish to change and write ‘Amendment’ on each page. Make sure you include your name and unique taxpayer reference (UTR) on each page too. Send the corrected pages to the address to which you sent your original return.

Commercial software

If you used commercial software to file the return, contact your software provider to find out how to file an amended return. If your software does not allow for this, contact HMRC.

When

You have until 31 January 2021 to make changes to your 2018/19 tax return.

If you have missed the deadline, you will need to write to HMRC instead. This may be the case if you find a mistake in your 2017/18 return after 31 January 2020. In the letter, you will need to say which tax year you are amending, why you think you have paid too much or too little tax and by how much. You have four years from the end of the tax year to claim a refund if you have overpaid.

Changes to the tax bill

If amending the return changes the amount that you owe, you should pay any excess straight away. Interest will be charged on tax paid late. If your 2018/19 liability changes, your payments on account for 2019/20 may change too.

If as a result of the changes made to the return you have paid too much tax, you can request a repayment from your personal tax account.

Partner note: See www.gov.uk/self-assessment-tax-returns/correction.

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“Just because a gift is provided each year, or is provided to all staff members, does not mean that the employee has a contractual entitlement to it.”

Trivial benefit traps – Contractual obligations

The trivial benefits exemption allows employers to provide employees with low cost benefits free of tax and National Insurance and any reporting obligations. For the purposes of the exemption, a benefit is trivial if the cost per head is not more than £50. Where trivial benefits are provided to an officer of a close company or a member of their family or household, an annual cap of £300 per tax year also applies.

For the exemption to be available, the benefit must not be provided in return for services provided and the employee must not be contractually entitled to receive the benefit.

Contractual entitlement

Contractual entitlement is wider than simply inclusion in the contract of employment. Consequently, the fact that the contract makes no reference to the provision of trivial benefits is not enough to satisfy the conditions for the exemption.

In the December 2019 issue of their Employer Bulletin, HMRC highlighted a number of ways in which a contractual obligation may arise, including:

  • a letter to the main contract document
  • a staff handbook
  • a redundancy agreement
  • an employer union agreement

If any of these provide for the employee to receive the trivial benefit, the exemption will not apply.

Beware of creating a ‘legitimate obligation’

Employers seeking to make use of the trivial benefits exemption should also be wary of falling into the ‘legitimate expectation’ trap; a contractual obligation may also arise is the employee has a legitimate expectation to receive the benefit.

In the December 2019 issue of Employer Bulletin, HMRC illustrate this with an example of an employer who provides employees with a cream cake each Friday. While there is no contractual obligation for the employer to provide the employees with a cream cake on a Friday, the fact that the employer does so every Friday creates a legitimate expectation, taking the provision of the cakes outside the trivial benefits exemption.

Frequency seems to be a problem here – HMRC seemingly do not apply the legitimate expectation argument where a benefit is provided annually, even if it is provided each year. HMRC’s Employment Income Manual at EIM21867, states:

“Just because a gift is provided each year, or is provided to all staff members, does not mean that the employee has a contractual entitlement to it.”

The guidance instructs HMRC officers that they “should not normally challenge modest gifts that are provided infrequently to employees, just because they are given to employees each year – for example, a Christmas or birthday gift”.

Good practice

To avoid falling into the legitimate expectation trap, vary both the nature and timing of trivial benefits provided to employees.

Partner note: ITEPA 2003, s. 323A.

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Making the most of pension tax allowances

Pension savings can be tax efficient as contributions to registered pension schemes, attracting tax relief up to certain limits.

Limit on tax relief

Tax relief is available on private pension contributions to the greater of 100% of earnings and £3,600. This is subject to the annual allowance cap.

Tax relief may be given automatically where your employer deducts the contributions from your gross pay (a ‘net pay scheme’). Alternatively, if you pay into a personal pension yourself or your employer pays contributions into the scheme after deducting tax, the pension scheme will claim basic rate relief (‘relief at source’). Thus if you pay £2,880 into a pension scheme, your scheme provider will claim basic rate relief of £720, meaning your gross contribution is £3,600. If you are a higher or additional rate taxpayer, the difference between the basic rate tax and your marginal rate can be reclaimed from HMRC via your self-assessment return.

Annual allowance

The pension annual allowance caps tax-relieved pension savings – contributions can be made to a registered pension scheme in excess of the available annual allowance, but they will not attract tax relief. The annual allowance is set at £40,000 for 2019/20; although this may be reduced if you have high earnings. The annual allowance taper applies where both your threshold income is more than £110,000 (broadly income excluding pension contributions) and your adjusted net income (broadly income including pension contributions) is more than £150,000. Where the taper applies, the annual allowance is reduced by £1 for every £2 by which adjusted net income exceeds £150,000 until the annual allowance reaches £10,000. This is the minimum amount of the annual allowance. Only the minimum allowance is available where adjusted net income is £210,000 or more and threshold income is more than £110,000.

The annual allowance can be carried forward for up to three tax years if it is not used, after which it is lost. The current year’s allowance must be used first, then brought forward allowances from an earlier year before a later year.

Example

Harry has income of £100,000 in 2019/20. He has received an inheritance and wishes to make pension contributions of £60,000. In the previous three years he has used £10,000 of his annual allowance, leaving £30,000 to be carried forward for up to three years.

To make a contribution of £60,000 for 2019/20, Harry will use his annual allowance of £40,000 for 2019/20 and £20,000 of the £30,000 carried forward from 2016/17. The £10,000 remaining of the 2016/17 allowance will be lost as cannot be carried forward beyond 2019/20. The unused allowances of £30,000 for 2017/18 and 2018/19 can be carried forward to 2020/21.

Reduced money purchase annual allowance

A lower annual allowance of £4,000 (money purchase annual allowance (MPAA)) applies to those who have flexibly accessed pension contributions on reaching age 55. This is to prevent recycling of contributions to secure additional tax relief.

Lifetime allowance

The lifetime allowance places a ceiling on your pension pot. For 2019/20 it is set at £1,055,000. A tax charge will apply if you exceed the lifetime allowance.

Partner note: FA 1994, s. 227ZA, 288, 228ZA, 218.

It is easy to fall into the trap of assuming that legal and professional costs can be computed in calculating taxable profits if they are incurred wholly and exclusively for the purposes of the business; however this is only part of the story.  

Legal and professional fees – Capital or revenue?

At some point, a landlord is likely to incur legal and professional fees in connection with the running of their property rental business. It is easy to fall into the trap of assuming that these costs can be computed in calculating taxable profits if they are incurred wholly and exclusively for the purposes of the business; however this is only part of the story. The landlord must also determine whether the costs are revenue or capital in nature. The rules also differ depending upon whether the accounts are prepared on the cash basis or using traditional accounting under the accruals basis.

The rule

The nature of the legal fees follow that of the matter to which they relate – so if the fees are incurred in relation to an item which is itself revenue in nature, the legal and professional fees are also revenue in nature. Likewise, legal fees that are incurred in connection with a matter that is capital in nature are also capital in nature.
Legal fees that are revenue in nature would include, for example, fees incurred to recover unpaid rent, while legal fees that are capital in nature would include fees incurred in connection with the purchase of a property.

Cash or accruals basis

Revenue items are deductible in computing profits regardless of whether they are prepared under the cash or accruals basis, although the time at which the relief is given will differ. Under the cash basis, the deduction is given for the period to which the expenditure relates, for the cash basis the deduction is given for the period for which the expenditure is incurred.
For capital expenditure different rules apply. No deduction is allowed for capital expenditure under the accrual basis, whereas under the cash basis, the treatment depends on the nature of the item – capital expenditure is deductible under the cash basis unless the expenditure is of a type for which a deduction is expressly forbidden. Items of the forbidden list include expenditure in or in connection with lease premiums and the provision, alteration or disposal of land (which includes property).

Example of allowable revenue items

A deduction for legal and professional fees will normally be allowed where they relate to:
• costs of obtaining a valuation
• normal accountancy costs incurred in preparing accounts of the rental business and agreeing the tax liabilities
• costs of arbitration to determine the rent
• the costs of evicting an unsatisfactory tenant to re-let the property

Example of capital expenses

The following are examples of legal and professional fees which are capital in nature:
• legal costs incurred in acquiring or adding to a property
• costs in connection with negotiations under the Town and Country Planning Act
• fees incurred in pursuing debts of a capital nature, such as the proceeds due on sale

Leases

Leases can be tricky. The expenses incurred in connection with the first letting or subletting for more than one year are deemed to be capital and therefore not deductible – this would include the legal fees incurred in drawing up the lease, surveyors’ fees and commission. However, if the lease is for less than one year, the associated expenses can be deducted. Normal legal and professional fees on the renewal of a lease are also deductible if the lease is for less than 50 years; although any proportion of the fees that relate to the payment of a premium are not deductible.
If a new lease closely follows the previous lease, a change of tenant will not render the associated fees non-deductible. However, if the property is put to other use between lets, or a long lease, say, replaces a short lease, the associated costs will be capital and non-deductible.

Partner note: HMRC’s Property Income Manual PIM 2120

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Renting out a property at a rate below the commercial level might sound like a great idea – but it might cost you dearly if you try to seek tax relief for your expenses!

Properties not let at a commercial rent

There may be a number of reasons why a property is occupied rent-free or let out at rent that is less than the commercial rate. This may often occur where the property is occupied by a family member in order to provide that person with a cheap home. For example, a parent may purchase a house in the town where their student son attends university and let it to the student, and maybe even his housemates, at a low rent to help them out. While the parents’ motives are doubtless philanthropic, their generosity may cost them dearly when it comes to obtaining relief for the associated expenses.

Wholly and exclusively rule

Expenses can only be deducted in computing taxable rental profits if they are incurred wholly and exclusively for the purposes of the property rental business. Unfortunately, HMRC take the view that unless the property is let at full market rent and the lease imposes normal conditions, it is unlikely that the expenses are incurred wholly and exclusively for business purposes. So, where the property is occupied rent-free, there is no tax-relief for expenses.

If the property is let at a rent that is below the market rent, a deduction is permitted, but this is capped at the level of the rent received from the let. This means that where a property is let at below market rent, it is not possible for a rental loss to arise, or for expenses in excess of the rent to be offset against the rent received from other properties in the same property rental business.
Periods between lets

Where there are brief periods where the property is occupied rent-free or let out cheaply, it may be possible to obtain full relief for expenses. For example, if the landlord is actively seeking a tenant and a relative house sits while it is empty, relief will not be restricted as long as the property remains genuinely available for letting. In their guidance HMRC state, that ‘ordinary house sitting by a relative for, say, a month in a period of three years or more will not normally lead to loss of relief’. However, if a relative takes a month’s holiday in a country cottage, relief for expenses incurred in that period will be lost.

Commercial and uncommercial lets

Where a property is let commercially some of the time and uncommercially at other times, expenses should be apportioned on a just and reasonable basis between the commercial and non-commercial lets. Any excess of expenses over rents in the period when commercially let can be deducted in the computing the profit for the rental business as a whole. However, an excess of expenses over rent when the property is let uncommercially are not eligible for relief.
Timing must also be considered – expenses relating to uncommercial lets cannot be deducted simply because they are incurred when the property is let commercially.

Partner note: HMRC Property Income Manual PIM 2130.

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