deposits on tax returns

[hebawom]

I'm just getting around to doing my tax returns and have a question about deposits.

If a tenant pays me a deposit in one tax year and abandons the following tax year where I retain his deposit against rent arrears. Which year to I declare the deposit as income?

[nipster101]

The year you apply the deposit to cover rental income. Before this the deposit would have been a creditor of your rental business. At the time you apply the deposit to cover rental income is the time it is considered income of your property business. see the last paragraph at http://www.hmrc.gov.uk/manuals/pimmanual/pim1051.htm

[hebawom]

That's what I thought, thank you for confirming. Much appreciated

[JaneK2011]

As the deposit remains the tenants money unless you successfully claim it at a later date to cover unpaid rent or damage, it's irrelevant when the tenant initially gave it to you.