How to use it
- 1Add every rent receipt and every cost as it happens, with the property it relates to.
- 2Choose a category for each line. The category decides whether the cost reduces your rental profit, goes to the finance-cost credit, or is capital.
- 3Only the interest part of a mortgage payment goes in Finance costs. Capital repayments don't go in at all.
- 4At the year end, the Summary sheet gives total income, allowable expenses and finance costs, ready for the UK property pages (SA105).
- 5Keep the receipts and statements behind each line for at least five years after the 31 January deadline.
What each field means
- Date
- When the money came in or went out.
- Property
- A short name for the property, so each one can be totalled.
- Income or expense
- Whether the line is money in or money out.
- Category
- Sets how the line is treated for tax.
- Allowable expense
- Filled in for running costs that reduce rental profit.
- Finance cost
- Mortgage and loan interest: relieved as a basic-rate tax credit.
- Capital
- Improvements. Not allowable against rent, but keep them for Capital Gains Tax.
Three kinds of cost
HMRC lets you deduct costs incurred wholly and exclusively for the rental business: repairs and maintenance, utilities and council tax you pay, landlord insurance, letting agent fees, accountancy fees, advertising and the business share of vehicle costs. Replacing furniture or appliances like for like is also deductible.
Mortgage and other finance costs are treated differently. Since 6 April 2020, Income Tax relief on residential finance costs is restricted to the basic rate, given as a tax credit rather than a deduction. Only the interest is relieved, never the capital repayment.
Capital spending, such as an extension or a kitchen upgraded to a higher specification, isn't allowable against rent. Keep the records anyway: it can reduce Capital Gains Tax when you sell.
The property allowance
If your total rental income is small, you can use the £1,000 property allowance instead of claiming expenses. You can't claim both, so the Summary sheet shows the two side by side.
Licence and disclaimer
Free to use, copy and adapt for your own business or personal records. Please don't resell it or republish it as your own template.
A template is a starting point, not advice for your circumstances. Check the result against the GOV.UK guidance linked below, or ask an accountant.
Related
What else will you need?
- TemplateMileage logA mileage log records each business journey: the date, where you went, why, and the miles.PDFExcel
- SA100SA100 tax returnThe SA100 is HMRC's main Self Assessment tax return.
- ChecklistSelf Assessment documents checklistBefore you file a Self Assessment return, gather your UTR and National Insurance number, your Government Gateway sign-in, any P60, P45 or P11D, your business and rental income and expense records, interest and dividend statements, details of anything you sold that may have made a gain, and records of pension contributions and Gift Aid.PDF
Rather we did it?
Countify can handle this for you, for a fixed fee agreed upfront.
Questions
Frequently asked questions.
Can I deduct my mortgage payments?
Only the interest element, and for residential property it gives a basic-rate tax credit rather than reducing your profit. Capital repayments aren't relieved at all.
Is a new kitchen an allowable expense?
A like-for-like replacement can be. An upgrade to a higher specification is capital spending, which isn't allowable against rent but may reduce Capital Gains Tax later.
How long do I keep my rental records?
At least five years after the 31 January tax return deadline for each tax year.
Checked against GOV.UK on · Reviewed by Kamran Ishaq FCCA, Founder & CEO, on .
Sources: Work out your rental income when you let property (opens in a new tab) (HM Revenue & Customs); Renting out a property (opens in a new tab) (HM Revenue & Customs).