Lettings Accounts Checklist

We prepare individual summaries for each rental property. In the case of multiple properties each set of lettings accounts is combined for inclusion in your self assessment tax return. Please therefore prepare a separate set of records for each of your rental properties.

Where you have a mortgage on a property it is crucial that we have accurate details. All UK lenders issue a 5 April certificate or a 5 April mortgage statement precisely for the reason that your accountant will ask you for one. They know that these figures are required for self assessment.

If the mortgage interest information cannot be obtained, then we cannot prepare your lettings accounts and we cannot prepare your self assessment tax return. It’s as simple as that, no ifs, no buts. In the past we have lost clients over this issue, and that’s fine by us. You need a lender who is going to help you keep onside with tax law. If you’re not happy with your lender, complain to them, and then (if you have to) refer them to the Financial Ombudsman, because you are entitled to a mortgage interest certificate.

Please follow this guide carefully and let us have the information and the documentation detailed below. For self assessment purposes the tax year starts on 6 April one year, and ends on 5 April the next year.

Bank/Finance House items

• A copy of a loan interest paid certificate for the whole tax year.
• If the lender cannot provide a certificate, please let us a copy of detailed statements from your lender showing actual loan repayments made, the precise dates, and indicating clearly how much of that represents a repayment of capital and how much is a payment of interest.

Income items

Records of all rents received. That could be any one of the following:

• Copies of all rental invoices issued.
• Copies of all statements from your lettings agent.
• Other records which clearly show all monies received.

Expense items

For an expense to be allowable, it must be incurred in the course of letting a property. The legislation is deliberately vague on what is an “allowable expense”. It talks about the expense being “wholly and exclusively” for the purpose of the lettintgs.

So, letting agent fees to set things up are allowable, but major works before lettings commence are not. Putting yourself “in a position to let” is not the same thing as “letting out a property”. Once lettings have started, then repairs and renewals (new washing machine,etc) are allowable. Significant works to the property are not. As a rough guide, if the value of the property is enhanced (new central heating, roof repairs) then that’s a capital item which may affect the capital gains tax position when a property is sold, it’s not an expense item. In other cases, if the expense is intended to keep tenant 1 in place, or to get tenant 2 into the property, then it may be allowable.

The lettings expenses we need to see are any combination of the following:

• All supplier invoices addressed to you as a landlord.
• Copies of all statements from your lettings agent.
• Other receipts and expense vouchers which support your other rental outgoings, service charges, landlord insurance and that sort of thing.
• Where documents are not available please let us have a note of the nature of the expense and the amounts paid. This should apply only in exceptional cases where (for example) the tenant has left and has taken the council tax bill, and you have had to pay some later instalments of council tax yourself.

There’s a Which guide which attempts to clarify the law on expenses.