Property income and the accrued income scheme

Question 1

Profits from rental properties

Answer 1

Income calculated on a cash basis, taxable only when cash is received and period relating is irrelevant

If multiple properties add all together, excluding furnished holiday lettings

Question 2

Allowable deductions

Answer 2

Expenses incurred wholly and exclusively for a property business are allowable including, insurance, agent’s fees, repairs and interest on a loan to acquire or improve a non-residential property

Question 3

Finance costs

Answer 3

Finance costs incurred to buy or improve property are deductible, includes interest payable and incidental costs of obtaining finance

From 2019/20, 25% of finance costs are an allowable deduction and the remaining is at a basic rate 20% by deducting from income tax liability.

This does not apply apply to furnished holiday letting or non-residential properties (offices etc.)

Question 4

Replacement furniture relief

Answer 4

Relief available to landlords.

On replacing an identical asset only not on the purchase of a new one or an improvement (inc. going from a washer to a washer and dryer)

Relief reduced by proceeds from sale of old unit