Chapter 4 - Property Income Flashcards
Property Income
A type of non-saving income
The figure to take is:
Income received (cash basis for an individual otherwise stated)
less: Allowable expenses
Agent’s fees (Letting expenses)
Insurance
Gardener’s cost
Interest is always 0 - 20% comes off income tax liability at the end
SBA on Capital Repairs E.g. A Roof - 3%
Repairs for the cost above what the insurer paid
Always based on time paid
Ignore: initial repairs,
Tax relief on Interest
Always 20%. It deducts pre-calculation of tax liability line.
E.g. Just before income tax liability - it IS NOT included in the working for assessable property income
Allowable Expenses: Property
Expenditure on Plant and Machinery e.g. tools used for maintenance? Yes
Cars - No
Allowable Expenses: Residential Property
Fixtures = Furniture and TV: No. But yes if replacement
If replacing - Yes, however it’s replacement cost less disposal of original
Property Losses and Amalgamation
Amalgamate with lots of properties
If the costs are greater than the rent received, assessable income is 0
Premiums received on granting a short lease >50 years
Premium:
Less:
Premium2%(n-1)
TOTAL
Furnished Holiday Lettings
Rules:
Must be let furnished
Let on a commercial basis with a view to realise profit
Available at least 210 days per year
Let at least 105 days per year (can be average across properties)
Not let for ‘long-term occupation’ over 155 days per year
Tax treatment: Furnished Holiday Lettings
Treated as separate rental income on face of tax working
Finance costs fully deductible (not 20% like property income)
Plant & Machinery both fully deductible under cash and accruals basis
Rent-a-room relief
7,500 exempt from tax (or divided between two if money goes to two)
If rent-a-room exceeds 7,500
Can choose between normal assessment e.g. Rental income received less expenses paid, OR:
Rental Income received (or receivable)
Less: 7,500
Approved mileage allowances for own cars
First 10k miles: 45p
Over 10k miles: 25p
