FHL Expenses & Dates

Since May 2023, my flat has been available for short term let through an agent and meets FHL criteria. I’m calculating the numbers for this tax year so far but am unsure of the following. 1 - My flat is leasehold and I pay a building management/service charge. Is this an allowable expense? 2 - Bookings for March 2024 will be paid to me after April 5th. Will that payment count towards the current tax year or the next tax year? 3 - Same as above with insurance. I paid for liability insurance in March 2023, before the tax year my FHL started in, can that expense still be claimed? 4 - Again for utility bills, do they apply to the tax year the usage occurred or the tax year the payment was made? Thanks.

Hi,

Which tax year bookings for March 2024 as well as building management or service charges, insurance and utilities are to be accounted for, would depend on the basis you are using for the furnished holiday letting (FHL).

If you are using the cash basis, then receipts and expenses are accounted for when the money is paid, whereas, the traditional basis, you would declare these when they have arisen or been incurred, for example March 2024. As long as the property is only used as a FHL and not occupied by yourself, these would be allowable expenses.

You can find further guidance on cash basis for FHLs in PIM1092.

PIM1092 - Cash basis for landlords: overview

Thank you.

Thank you for your reply, it's very helpful. Can I use March 31st as my accounting year end?

Hi,
If you are using the tradaitional accounting method then you can use the 31 March as your accounting year end.
Thankyou.

One final question here, does the tax bill for the FHL get paid directly to HMRC, without affecting the tax code my employer uses for my full time job? Thanks again.

Hi,
If you owe tax on your property income, we will collect it via your tax code unless you ask us not to.
Please see the guidance on page TRG14 of the tax return guide:
How to complete your tax return for Self Assessment
Thankyou.