Are utility bills tax-deductible?

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    Are utility bills tax-deductible?

    I've had a buy-to-let on a standard Assured Shorthold Tenancy for a few years and my tax return has been pretty simple. But since last year I have also had two lodgers, staying with me at my own residential property. Now I have purchased a small additional property, which I have moved into myself and I have taken on another tenant "at home" to help offset the cost. So that house now has three tenants, renting by the room, but with all bills included.

    Does this mean that when I complete my next tax return, I should list all the following as expenses: energy, broadband/TV, council tax, water, TV licence... anything else? Now that I don't live there myself, these are things that I would not be paying, if i wasn't renting rooms out, so I'm ASSUMING they are legitimate expenses. Is that right?

    #2
    Other than you can't resell a TV licence, so your tenants each need to each have their own, yes.

    With three tenants in the place, you've created a small HMO and you'll have a number of other expenses to claim, because small HMOs need to be properly set up and administered.
    I'm assuming you've checked that the local authority don't require a licence.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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      #3
      Tenants living at landlord's home ( with resident landlord ) are classed as lodgers and if the lodgers rent is below £7500 during tax year , there is no need to report it and cannot claim any expenses.
      So for last year 2020-2021 , you may still only have one BTL to report in your tax return plus lodger income if over £7500.

      And for 2021-2022 ( current tax year), you will be reporting rental income and claiming expenses from 2 properties.

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        #4
        jpkeates,

        Thanks. Yes I checked the local authority who said that only "large" HMOs have to be licensed, and that counts as 5 or more tenants.

        I had no idea that separate TV licences would be required. How do HMO landlords usually handle this?
        (a) should I purchase three additional licences? Would they all be in my name? If they need to be in individual names, what happens when tenants move out?
        (b) do I just tell them that they need to get a licence each? Am I liable in any way if they don't?

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          #5
          Even if you don’t need a licence, managing an HMO can be quite onerous. You’ll need a fire risk assessment, and then to comply with its requirements as a first step.

          That usually means fire retardant doors, different door locks, hard wired fire and smoke and heat alarms for a start.

          The regulations for an HMO and a large HMO aren’t very different.

          You should just tell the occupants that they need to sort out their own TV licence. I have no idea about liability as the owner, but I’d imagine you’d only be liable if you provide a TV.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            jpkeates,

            Thank you. Lots of useful info there.

            Sorry, didn't have Email Notifications turned on. Though that would have been automatic on a site like this.

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