accounting

If you are planning to buy a rental home, or you're thinking about what to do with one you have just acquired, this is the place for any questions about starting out in the rentals business.
Gray lady
Posts: 4
Joined: Wed Apr 11, 2018 12:10 pm
Location: Lancashire

accounting

Post by Gray lady »

My sister and I are setting up a holiday let in Lancashire. This is all very new to us and we have been struggling to learn all the ins and outs. Thankyou for all previous Lay My Hat posts they have very informative. We have decided to set up as a Partnership and use "Cash Basis" accounting. All very well but I am struggling to work out what headings I should have on my Excel spread sheet. I have kept all our receipts as we go along but wonder now if all the items we have bought for setting up can be included for Captital Allowance for tax purposes and do they need catagorizing? We are beginning to think we should employ an accountant for our first year and wonder if anyone can give us details of one who deals with FHLs and some indication of what we might expect to pay?
Thankyou
New to all this!
Jenster
Posts: 454
Joined: Tue Mar 08, 2016 8:24 am
Location: Cornwall
Contact:

Post by Jenster »

Hi Gray Lady,

I can only tell you what I do - a simple spreadsheet that records all my income and outgoings. I have a separate sheet for capital allowances - the HMRC website is a good start to work out what can go in this category. As I understand it you can include startup expenses as long as you categorise them correctly (capital allowance or normal expenses). I also have a separate sheet to work out mileage, to add to my expenses, which I record in book in my car and transfer to the spreadsheet. I also add laundry expenses at the end of the year, based on a rate per load I found on the internet (detergent etc just gets recorded as an expense when I buy it, the rate per load is for washing machine electricity). At the end of the year I tally up to make sure the various incoming deposit and final payments match what my booking spreadsheet tells me I should have made in bookings.

It's quite simple really and HMRC are very good if you phone them for advice. In the unlikely event that you are investigated they will check your figures and tell you if you have done anything wrong, but the worst that would happen is you might have to pay a bit more tax - they are unlikely to fine or prosecute anyone who has genuinely done their best to be honest. Its all relatively simple and personally I wouldn't pay for an accountant to do it.

Good luck!
Jenny
Gray lady
Posts: 4
Joined: Wed Apr 11, 2018 12:10 pm
Location: Lancashire

Post by Gray lady »

Hi Jenny thankyou so much for posting a reply. I have been dipping into the HMRC infomation (can't take in too much at any time as the concepts are all new to me!) and beginning to think I needed to sort my receipts, your post has now confirmed that I should. Thankyou for your good wishes. Regards Gray Lady
New to all this!
User avatar
greenbarn
Posts: 6146
Joined: Sat May 30, 2009 6:41 pm
Location: The Westmorland Dales, Cumbria

Post by greenbarn »

Unless you’re fully aware of all the things you can claim as allowable start up expenses my thinking is that you’ll find a decent FHL accountant good value, certainly in year 1 and possibly ongoing.
I do a lot of the donkey work through the year entering everything into a package called Home Accountz, which is fine if you’re under the VAT threshold, but I still get an accountant to go through it.
I think it costs me around £350 - £400, which is, of course, an allowable expense against tax...
Mine is based near Crooklands a couple of minutes from J36 of the M6; if that’s of any interest to you let me know and I’ll message you his details.
Gray lady
Posts: 4
Joined: Wed Apr 11, 2018 12:10 pm
Location: Lancashire

Post by Gray lady »

Thankyou for your thoughts Greenbarn. I would be grateful for the details of your FHL accountant.
New to all this!
sparkJS
Posts: 58
Joined: Sun Nov 27, 2016 3:43 pm
Location: North Cornwall
Contact:

Post by sparkJS »

When it comes to accounting. The biggest time consuming expense is bookkeeping. So the easier you can make this the better.

As an accountant, we want people to give us their books in a format that we can work with. It may be as simple as a spreadsheet totalling up 1. Rental income 2. Rent, repairs, insurance and cost of services 3. Loan interest and bank charges 4. Legal, management and professional 5. Other expenses (these are the boxes on the tax return)

Capital allowances should be worked out separately. And need to make yourself aware of the annual allowance available.

Other concepts that you need to read up on are whether the property is defined as a FHL each year. If some years it does not then perhaps seek an accountant.

The Property income allowance.

How deposits are accounted for.

If you want to keep things simple then use the cash basis and put all your income and outgoings in and out of a dedicated bank account. It may be worth looking at these new challenger banks like CountingUp which is a bank and accounting function in one. This would also prepare you for Making Tax Digital when this finally gets implemented.

You can go and see a local accountant for free usually (1st meeting) and you can get an indication whether they act for clients with FHL's. Perhaps don't tell them your circumstances and see if they know a bit about FHL's on the spot. (a bit sneaky but fair I think).

Accountants in practice will deal with so many different industries that some may simply not have any clients that have FHL's. However nowadays with the tax advantages of FHL's over other property investments they are becoming more popular.
MG
User avatar
greenbarn
Posts: 6146
Joined: Sat May 30, 2009 6:41 pm
Location: The Westmorland Dales, Cumbria

Post by greenbarn »

Gray lady wrote:Thankyou for your thoughts Greenbarn. I would be grateful for the details of your FHL accountant.
I’ve sent you a message with the details - it should appear in you Inbox.
Gray lady
Posts: 4
Joined: Wed Apr 11, 2018 12:10 pm
Location: Lancashire

Post by Gray lady »

Thankyou for your input SparksJS, yes I see now how important it is to get therecords into the corect groupings and to provide the accountant with records in the way that makes the process quicker.Organisation I think is the key.
New to all this!
Skylark
Posts: 1
Joined: Thu Apr 05, 2018 12:22 pm

Post by Skylark »

Greenbarn

Could I be really cheeky and ask for your accountants details too?

We are in the middle of purchasing our first FHL and would appreciate any help we could get
Very very newbie!
User avatar
greenbarn
Posts: 6146
Joined: Sat May 30, 2009 6:41 pm
Location: The Westmorland Dales, Cumbria

Post by greenbarn »

Skylark wrote:Greenbarn

Could I be really cheeky and ask for your accountants details too?

We are in the middle of purchasing our first FHL and would appreciate any help we could get
No problem- PM sent!
Karen&John
Posts: 59
Joined: Sun Aug 13, 2017 6:50 pm
Location: Norfolk

Post by Karen&John »

Just doing our first year accounts.
Got the gist of from HMRC guidance notes and posts here.

Can someone please clarify?
Have I got this right, If you use (the simpler) cash basis accounting method, then you cannot claim capital expenses (apart for cars)?
So I need to use the traditional accounting method (very little difference to us)

All else seems clear.

Best,
J&k
Post Reply