Are you unsure about what records you should be keeping as a landlord? To find out more information about what records you should be keeping then read our blog below.

What does this mean?

If your rental income is below £1,000 then you as a landlord must declare the income to HMRC and pay tax based upon any profit that is made by the rental business.

You can calculate your profit by deducting your allowable expenses from the rental income of the property business.

You should be aware that it may be beneficial for you as the landlord to claim the property allowance of £1,000 and deduct this instead of deducting your actual expenses.

You should note that this will only work in your favour where actual expenses are less than £1,000.

It is essential that you keep detailed records in order for you to calculate profits or losses.

What records do I need?

For rental income you should keep records of the following:

  • Income for the services provided to the tenants (maintenance or repairs)
  • The dates of when the property has been let
  • Income received from renting the property
  • Any other income such as the sales of domestic goods for which replacement relief is claimed
  • Supporting documentation, such as, rent books, bank statements and invoices

What records do I need to keep for my expenses?

You are eligible to claim expenses, but they must relate to letting out the property wholly and exclusively.

As a landlord you must keep records of the following expenses:

  • Wages of staff
  • Cleaning
  • Landlords insurance
  • Gardening
  • Agents’ fees
  • Advertising costs
  • Repairs and maintenance
  • Replacing domestic items

You should know it is important that you keep records of the list above but also you must keep supporting documentation, such as invoices, agent’s statements, bank statements and receipts.

If you choose to claim property allowance instead, then you will not have to keep records of actual expenses.

But, it may be useful to keep a copy of records, to check whether claiming the allowance is the best option for your business.

How should I keep my records?

Currently, landlords can keep records in the way that best suits them as there are no legal requirements.

The most common forms of record keeping include:

  • Software packages which are designed to keep records
  • General accounting packages
  • Spreadsheets
  • Manual paper copies

Therefore, as long as you keep some form of accurate records then you cannot be scrutinised by HMRC.

Making Tax Digital

You should be aware that as a landlord you may be faced with some changes when MTD comes into practice, as you will be required to keep your records digitally.  You do not need to panic as this will not be introduced until 2020.

Further Actions

Therefore, you should not see keeping records as a burden that requires a lot of hard work and dedication, but rather as an effective way to keep track of your business’s expenses.

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Any questions?
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