What records does a private landlord need to keep?
As a private landlord you need to keep the right records. And there will be plenty of paperwork generated by your business. There will be digital records as well. But whether you keep hard copies or store digital files on your computer the records you need to keep will be split into three parts:
All business owners need to keep accurate records for tax purposes. And whether you prepare your own tax return or use an accountant's services you're responsible for gathering together the paperwork. After all your accountant can only work with the records you provide.
So, what are the tax records you need to keep?
Your rental income will be the biggest source of revenue for your property business. You need to record all the rent payments you receive along with invoices and statements. But you also need to keep a record of any other income you receive. This could include service charges or maintenance fees for example. The important thing to remember is to keep copies of all receipts and invoices as well as all your bank statements.
Unless you want to pay tax on all your income you must keep an accurate track of your expenses. Your tax liability is calculated after deducting expenses from income. Obviously, it's in your interests to keep detailed records.
Not all expenses are tax deductible of course. Your accountant can advise on this. But generally speaking the expenses you can claim for include:
- Professional fees including letting agent, accountant and legal charges.
- Landlord's insurance. Including building and contents insurance.
- Water rates, council tax and energy bills. As long as you and not the tenant pay these of course!
- Repair costs including those necessary for gas safety and energy performance certificates.
- Cleaning and gardening costs.
- Marketing expenses.
- Sundries including stationery, phone charges and printing costs.
Replacement of domestic items relief
This has replaced the old wear and tear allowance. It applies to new items such as household appliances and furniture. As long as they have replaced older items. For full relief the replacement item must be an identical type to the original.
Mortgage interest tax relief
The rules have changed regarding interest relief. For the 2018/19 tax year you can only claim 50% of your mortgage tax relief. This falls to 25% for 2019/20. From April 2020 the rules change again. A 20% tax credit will replace mortgage interest relief.
You can also claim for some capital costs against your rental income. This could include improving the property. With an extension perhaps.
Remember to record the VAT component of any income or expenditure should you be VAT registered.
Finally, always seek taxation advice from a professional such as an accountant.
As a private landlord there are certain records, you're legally obliged to keep.
- Gas safety certificate.
- Energy performance certificate.
You should also keep any other safety related documents including electrical safety certificates and any risk assessments you've commissioned.
Whilst not intended for HMRC or legally necessary there are other records you can keep to help you run your business.
Copies of the How to Rent Guide
You need to give a copy of the guide to new tenants so keeping some to hand makes sense. You can choose to send your tenant a digital copy instead so keeping a file on your PC will save you having to store hard copies.
You will sometimes need to send letters or emails to your tenants. These are often standard texts and you only need to change names, dates and addresses. Having templates of these letters will save you time and inconvenience. Landlords associations may provide the templates you need. Or you can save the first example of a letter you send and create your own template. These could include:
- Welcome letter.
- Tenancy agreement.
- Inspection notice.
- Notification of gas safety check.
- Rent arrears notice and final notice.
- Anti-social behaviour complaint.
- Notice to vacate.
Keep a spreadsheet or chart with important dates including service schedules for appliances, inspection dates, PAT testing schedules etc. This will help you stay organised and on top of essential maintenance tasks.
You should also keep copies of other maintenance documents including inventories and check in reports.
You'll probably have some important contacts on your phone. But having a separate contact book will help. Keep a list or copies of business cards for handymen, plumbers and electricians. Also include anyone else who may be able to help with your business such as your letting agent, furniture suppliers and gardeners.
Private landlords can find tenants fast by listing their property with MakeUrMove the online letting platform bringing private landlords and tenants together.