In year 2022/23, I have rental properties income and bank saving interest to be reported in the upcoming Self-Assessment Tax Return. I would like to seek your advice on the following issues.
• How to report saving interest (accrual or cash basis)
I have placed some saving into Bank’s 2 Year Fixed Term Bonds with both annual and monthly interest payments. One of the bonds pays interest annually on Feb 11 of each year and another bond pays interest monthly on the 7th of each month. Do I require to report interest within the 2022/23 tax year on accrual basis (even though I have not received the actual interest on the bond pay interest annually) or simply report interest received with “actual date of interest received which fall within the tax year”.
Example: Bond 1 - Purchased on Feb 11, 2023 which pay interest annually on Feb 11, 2024. I will only receive interest payment of GBP 366.00 on Feb 11, 2024. On April 5, 2023, I have accrued interest of GBP 54.00 (54 days between Feb 11 – Apr 5). Should I report interest income GBP 0.00 or GBP 54.00 in 2022/23 tax year?
Example: Bond 2 - Purchased on Dec 7, 2022 which pay interest monthly on 7th of each month. I will receive interest payment of GBP 31 on Apr 7, 2023. For the month of April 2023, should I report interest income GBP 0.00 or GBP 30.00 in 2022/23 tax year?
Is the answer to the above also applied to normal saving account with interest payment on 1st of each month
• How to report rental income (accrual or cash basis)
I have two rental properties. One of which I will receive monthly rental on 10th of each month and the other which I have received annual rental in advance on Oct 8, 2022. Do I require to report rental receipt on accrual basis or actual cash received basis.
Example: Property 1 – Lease start on Dec 10, 2022 for a year which tenant requires to pay monthly rental GBP 30.00. For the month of April 2023, should I report rental income GBP 0.00 or GBP 26.00 in 2022/23 tax year?
Example: Property 2 – Lease start on Oct 8, 2022 for a year which tenant has paid full annually rental of GBP 365.00. Should I report rental income GBP 365.00 or GBP 180 in 2022/23 tax year?
• How to report rental property expenses (accrual or cash basis)
For all annual expenses like letting agent fee, insurance and services charges etc., should I report on accrual or cash payment basis?
• Do I need to pay National Insurance Class 2
My wife and I have retired since 2021. We own 2 rental properties. Do I need to pay National Insurance Class 2, if yes how should I report and pay?