Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Mon, 23 Jan 2023 20:31:41 GMT by Paulson
Hi, One of my friends had property in a Council owned building in Scotland. The council changed the roof and split the bill among the landlords. My friend received a bill for more than £4000 in June 2020. He then tried to apply for some grants but nothing worked and he started to make the payments by direct debit in June 2021. He did not include this bill in the 2020-2021 tax year hoping that he will be able to get some grant. After he realized that there was no grant available, he started making payments in the 2021-2022 tax year (June 2021). He is paying £100/month direct debit each month to his £4000 bill which the council allowed him. Can he include the entire £4000 in the 2021-2022 tax year as repairing cost? Could you please tell us in which box this entry will go? Thanks
Posted Wed, 25 Jan 2023 14:22:00 GMT by Paulson
Any update on the above, thanks
Posted Thu, 26 Jan 2023 12:45:06 GMT by HMRC Admin 32

The UK deducts tax on the arising basis. This means that if the charge from the councile arose in 2020 to 2021 tax year, then the full cost of the repair should be shown in 2021 to 2022 tax return.  

On SA105 (2021) the full £4000 Roof repairs would be shown in box 25 "Property repaid and maintenance". Should a loss arise, there is guidance at:

HS227 Losses (2021)

Please note that the last date to amend 2020 to 2021 tax return is 31 January 2023. If it is too late to amend the tax return, then an overpayment relief claim can be made instead.  

Guidance on how to make an overpayment releif claim can be found at:

SACM12150 - Overpayment relief: Form of claims

Thank you.
Posted Fri, 27 Jan 2023 14:24:15 GMT by Paulson
Thank you so much for your reply. He is following Cash Basis accounting, not accrual accounting. Though he received the bill in the 2020-2021 tax year (June 2020), he did not start making payments by direct debits until June 2021 (2021-2022 tax year). He paid £100 in June 2021, then £100 in July 2021, and so on and he is still paying £100 per month to the council until the total reaches £4000. Is he allowed to claim the entire £4000 as repairing costs in 2021 - 2022 tax year or is he allowed to claim only whatever he paid until April, 2022 in 2021-2022 tax year? Thanks,
Posted Tue, 31 Jan 2023 14:29:07 GMT by HMRC Admin 2

Under the cash basis, the total amount of expenses brought into account in calculating profits or losses are those paid during the tax year.

When preparing his property income accounts for 2021-22, your friend can therefore only claim as expenses the repair bill payments he actually made during the 2021-22 tax year.                                                

PIM1094 - Cash basis for landlords: receipts and expenses

Thank you.

You must be signed in to post in this forum.