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Posted Tue, 26 Dec 2023 19:06:55 GMT by Shira O.
I started to rent out my car parking space at the end of February 2023. The total gross rental amount is £1200, £200 of which related to 2022/23 and £1000 related to 2023/24 if calculated on an accrual basis. However the whole amount was received upfront at the commencement of the tenancy at the end of February 2023. May I opt to adopt the accrual basis (no adjustment is needed because i have never earned any rental income before) such that the gross rental in each of the tax years would not exceed the threshold of £1000 and as such would not need to be reported in the self-assessment in any of 2022/23 and 2023/24?
Posted Mon, 08 Jan 2024 13:15:20 GMT by HMRC Admin 5

Property income is declared on a cash basis or traditional accounting. either way, for your scenario, the money has been received in the 1 tax year and must be declared as such.
Please see PIM1092 - Cash basis for landlords: overview

Thank you
Posted Mon, 08 Jan 2024 13:48:59 GMT by Shira O.
Thank you for your reply. I am a bit confused. The first part of your reply confirmed that I could adopt traditional accounting. Adopting the accrual basis in traditional accounting, the rental income for each of the tax years 2022/23 and 2023/24 should be £200 and £1000 respectively. As neither of them have exceeded the threshold of £1000, I would not need to include any of them in any of the tax returns for tax year 2022/23 and 2023/24. Right? Thank you in advance for your clarification.
Posted Fri, 12 Jan 2024 15:41:44 GMT by HMRC Admin 32

The traditional method of accounting uses the arising basis, which is when the income and expenditure arises, not when it is paid in or out. You if that method results in the figures provided, then you would not need to declare in a Self Assessment Tax return.

Thank you.

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