Cladding Bills, BSF and Property Income Expenses

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    Cladding Bills, BSF and Property Income Expenses

    Hi everyone,
    was preparing my property income self assessment for tax year ending April 2021 and needing help in understanding the expense related to cladding bills. So as we all know, all leaseholders facing cladding issue have now been received the extortionate bills related to cladding remediation. As part of my service charge invoice which was due 1 April 2021, the building management has put two separate charges, one related to overall service charge around 2,500 pounds and one related to cladding remediation of around 15,500 pounds for the half yearly April -Sept 2021 period. Building management sent along separate letter stating that the 15,500 bills are not enforceable since the BSF application is still currently underway (we still have not received application decision). I know that HMRC self assessment should state only expenses that are already paid for during the reported tax year, but interested to know what are the other leaseholders here have prepared for their tax returns? I suppose I should exclude the 15,500 bills from the expense and only put the 2,500 that i have already paid for before 1 April 2021.

    Any thoughts and comments are appreciated.

    #2
    If you have been billed 15500 for payment on 1 April 2021 ( and still not yet paid) , you can still include the bill as an expense under 2020-2021 because the tax year ends on 5th April 2021.

    Comment


      #3
      Thanks for your response Gordon999.

      i have been using cash basis (not traditional/accrual basis) when submitting self assessment in the past. According to HMRC guidelines, with cash basis you can only count the expenses you’ve actually paid (anything you owe isn’t counted until you pay it) - meaning if i continue to use cash basis on my income tax then i wouldn't be able to include the cladding remediation expenses until i actually paid it?

      Comment


        #4
        I suggest you could include the bill for £15500 in 2020-2021 and state in blank page that "expenses include £15,500 for cladding repairs and payment was due on 1 April 2021 , but not yet paid".

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