Allowable Expenses?

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    Allowable Expenses?

    I used to be a landlord. My last tenants claimed to have sold up wanting a temporary let while they looked for another house. The Lettings Agency also claimed this. Later it transpired they were claiming Housing Benefit, rent payments became later and later.

    For various reasons I needed to give them their notice, so I did this under a Section 21, giving them 2 months notice. They asked for an extension claiming that they had started conveyancing on a house purchase. I granted another month even though I did not believe the house buying story. (The Local Authority later confirmed in writing that they were on Housing Benefit).

    To cut a long story short they ignored the Section 21 and wouldn't move out. I ended up paying for a Possession Order and some of the costs of an Enforcement Order. The deposit taken didn't cover all the rent arrears and the house was left in such a filthy state it took many hours of cleaning and repairs.

    As I am now doing my tax return I am wondering what I can offset as expenses of the let. I presume I can deduct the cleaning and repairs, but not the unpaid rent? However I am wondering whether the legal expenses are an allowable expense of the let?

    #2
    Yes you can deduct the legal expenses .

    See notes about eviction of tenant under box 27 in Form SA105 Notes.

    If its "unpaid rent", its not income you received during the tax year ?

    http://www.hmrc.gov.uk/worksheets/2012/SA105-Notes.pdf

    Comment


      #3
      IMHO, they are all allowable against rental income.

      The unpaid rent becomes a Bad & Doubtful Debt when its recovery is unlikely.

      Comment


        #4
        Thank you for your reply.

        Just to clarify then, the unpaid rent is a bad debt and can be counted as an expense, or is it just income I never got?

        We did the cleaning ourselves, the Lettings Agency said that this could be charged at £10 per hour. I wouldn't rely on this, as they were also supposed to have checked out the tenants' financial background.

        Comment


          #5
          Thank you, I looked at box 27 regarding the legal fees of eviction. What is the significance of the 'with a view to re-letting' note? I didn't re-let. I found the whole thing so stressful I decided not to be a landlord any more!

          Comment


            #6
            Originally posted by EX-LANDLORD View Post
            Thank you for your reply.

            Just to clarify then, the unpaid rent is a bad debt and can be counted as an expense, or is it just income I never got?

            We did the cleaning ourselves, the Lettings Agency said that this could be charged at £10 per hour. I wouldn't rely on this, as they were also supposed to have checked out the tenants' financial background.
            It depends if you use the Accruals basis or Cash Basis. If the latter, Bad Debt relief is given automatically, as you have not received that rent.

            You cannot charge for cleaning if you do the work yourself - except for materials.

            Comment


              #7
              Originally posted by EX-LANDLORD View Post
              Thank you, I looked at box 27 regarding the legal fees of eviction. What is the significance of the 'with a view to re-letting' note? I didn't re-let. I found the whole thing so stressful I decided not to be a landlord any more!
              Lets say at the time of instructing a solicitor to evict the non-paying tenant, you intended to re-let and your letting business continues until you, at a later date decided to terminate the business.

              You can claim the expenses against rental income up to the date of terminating your letting business.

              Comment

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