Apportionment of costs

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    Apportionment of costs

    I own a BTL in London in my sole name.

    I also own various properties in Glasgow in joint names with my wife - they are different splitss: 50:50, 90:10; 80:20 etc..

    How do I allocate admin costs amongst myself and my wife (e.g. stationary, Pro rata household bills etc..) for tax purposes?

    Also if I travel to Glasgow purely for the BTL business, where would I offset the mileage cost. Would it be just in my tax return (since it was me travelling alone) or in a share proportionate to our ownership of properties?


    Assuming you have the appropriate trusts and HMRC notifications in place for the various ownership proportions...

    This can be a real PITA.
    I'd suggest that you record everything at property level, so costs are allocated to individual properties, that way an income/cost position per property can be identified and split accordingly.
    Where that's just not possible without operating at a stupid level - stationary and business travel - split the costs 50:50.

    I'd suggest that unless there's a good reason to do it otherwise that you take the time to get the properties into the same portions of ownership. It doesn't make sense to have different splits for different properties if it's a single business.
    If there's a PPR advantage, by all means reflect that and perhaps treat that property differently, but otherwise it's just a bit of a mess.

    You should be very careful about claiming pro-rated household bills, there's a risk of turning your home into a place of work.
    It's not something I claim for, personally.
    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).


      HMRC are unlikely to challenge any reasonable allocation of general overheads.

      Again. HMRC are unlikely to argue over small/reasonable travelling expenses - preferably not combined with family holidays etc.


        I would recommend OP should be using an accountant to advise on his complex situation and to submit his tax return for first one or two years .


          Thanks all.

          Also, are costs related to looking for new properties allowable (e.g. mileage when going to view properties)? If so, do you allocate them to existing properties or just put in a "general overhead" at the end?


            That is a trickier one. Abortive purchase costs are likely to be not deductible at all - either for Income Tax or CGT. For successful purchases, a deduction is more optimistic.


              What about the mileage costs of going to view a property that I ultimately end up buying?


                If the mileage is legitimately for the business (and only for the business) its an operating expense.

                I'd suggest recording all journeys that are exclusively for business and claiming against them.
                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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