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Self assessment timing and allowable expenses

Started by Haroon, November 22, 2023, 11:03:35 PM

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Hi there

I received conflicting advice on this on whether to complete it for 2022 - 2023. The context is that in August 2022 I have sold my rental property. During the financial year it had no income but did have lot of outgoings like council tax, bills, insurance etc

In December 2022 I have bought a new property and have expensed on it but tenants didn't move in until May 2023 so my understanding for this is that as it's a new property all the expenses from Dec 22 to May 23 would come under 2023-2024 rather then the previous year

Also a related question, as my new property is jointly owned with my wife rather then only by me as before, I wanted to check whether the allowable expenses are 50/50 split in the same way income is or can we adjust that based on actuals - eg I pay all the mortgage interest, so can I deduct that 100% from my income on the property?



The reason you are getting conflicting advice is probably because you need to decide if you were running one business during the whole period (2022 to now) or whether your 2022 business ended in August 2022 and a new one began on 2023 (when the latest tenancy began).

If it's one business throughout, the expenses on the new property are claimed as they arise. If it's a new business starting in 2023, the expenses are claimed when the business begins (which is May 2023).

I'd suggest that, given that your wife is now involved, that you treat the previous business as ending in August 2022 and a new one as beginning in May 2023. Which should tell you which tax year which expenses belong in.

Income and allowances are split in the same way. So, assuming the mortgage is joint, the split will be 50:50. You can change the split using a solicitor (or a conveyancer), but the split will again be both applied to both income and expenses and real, if you change the proportion of ownership so it's (say) 99:1 in favour of your wife, that's how the property will be owned.