Unquantifiable Expenses

[Cisnes]

I've a couple of properties that I rent out, doing all the management work myself from home.

When filing my tax return I claim for all the usual things - mortgage interest, repairs, insurance costs etc.

But what about all those unquantifiable expenses, such as mobile phones, pc's, cars etc, even pens and paper!

None of these items are used exclusively for rental purposes, but are there any rules of thumb to quantify them?

Thanks.

[subjecttocontract]

I don't accept that you can't quantify those items and I do manage to claim for them.....postage, telephone, mobile phone, isp costs, books & publications, cleaning materials, stationary, car mileage, car parking, consumables, photocopying etc etc.

[Cisnes]

I don't accept that you can't quantify those items and I do manage to claim for them.....postage, telephone, mobile phone, isp costs, books & publications, cleaning materials, stationary, car mileage, car parking, consumables, photocopying etc etc.I'd be interested in how you quantify things that aren't used solely for the rental business if you care to elaborate or give examples.

[Poolboy]

I claim for any expense incurred wholly & exclusively related my rental property - it's up to you to prove if you get investigated so for me it's receipts all the way.

It's just not worth the hassle if say I buy a pen which could be used for other things, but postage, paper, phone calls, travel are easily accountable.

Sadly time isn't.

[subjecttocontract]

Some of those items can be easily and accurately quantified by records or receipts: car mileage, books & publications, cleaning materials, stationary etc.
Others can be estimated: photocopying, postage, car parking etc.

[Cisnes]

I claim for any expense incurred wholly & exclusively related my rental property - it's up to you to prove if you get investigated so for me it's receipts all the way.

Some of those items can be easily and accurately quantified by records or receipts: car mileage, books & publications, cleaning materials, stationary etc.
Others can be estimated: photocopying, postage, car parking etc.I appreciate it's straightforward for items used wholly and exclusively for the rental property and I'd agree that receipts are the best way to do it.
But what I'm referring to are things that aren't used wholly or exclusively and how you would calculate them, for instance mobile phone or PC use.

[mind the gap]

Some of those items can be easily and accurately quantified by records or receipts: car mileage, books & publications, cleaning materials, stationary etc.
Others can be estimated: photocopying, postage, car parking etc.

Sorry to be pedantic, but if we are going to claim for it, perhaps we ought to spell it correctly : stationery.

(Stationary means immobile).

Otherwise I agree with the suggestion. Phone calls to tenants, agents or tradespeople in connection with the property can be either estimated or logged, whichever's easier. PC use - not sure. The cost of electricity is surely negligible; it would be the outlay on the hardware which would be the expense. I'm sure Telometer or someone knowledgeable will be along at some point and can advise how much you could claim, if anything.

[subjecttocontract]

I appreciate it's straightforward for items used wholly and exclusively for the rental property and I'd agree that receipts are the best way to do it.
But what I'm referring to are things that aren't used wholly or exclusively and how you would calculate them, for instance mobile phone or PC use.

Well I'm no expert but I can tell you how we deal with it.

We have quite a few rental properties and so spend much of our time running things. We tend to view items such as mobile phones/ PC's as specifically business assets which are used most of the time for business use. Occasionally a mobile or PC will be used for private use and so we split the costs in a way that we consider is generous towards HMRC & that if necessary we can justify.

[sparrow]

I would just work out how much it costs to run/buy the item and the claim for the approximate percentage that you would use for the property.

For example if you never use your mobile other than for the property claim 100%, if you only use it 5% of the time, then claim that.

I think as long as the costs you claim for are reasonable then there shouldn't be a problem and i always tend to err on the side of caution. I know a lot of people who are completely the opposite though and claim for what i would consider ridiculous items for work and property related expenses.

[Cisnes]

Take the following scenario:

You are Larry Landlord, landlord of three properties. After a busy day at the office, you get home and check your answering machine (£69.99 from Argos), along with a message from your mother-in-law and a couple of messages for your kids, is one from Tracey Tennant, a rather troublesome tennant in one of your properties, complaining of a blocked toilet.
You unplug your mobile phone (£55.90 from Carphone Warehouse and £15 a month on Vodaphone for unlimited texts and 100 minutes) from where it's charging (Npower 9.95p per kwh) and give Tracey a ring to let her know you're coming straight round.

Before you leave you grab your trusty old plunger (8 shilling and 6 from HandyAndys) and a bottle of bleach (£1.20 BOGOF Morrisons) from under the sink.
Putting on your coat and hat (£35 Matalan) because its peeing down outside, you drive the 7.4 miles to Tracey's in your family's Ford Focus (£12,500 from Carcraft).
On the way, you notice you're running low on petrol and call into your local Esso and put £20 worth of fuel in (114.9p per litre) thinking it will see you through to next payday.

On arriving at the property, you give the toilet a good old plunge, but ondoing so your expensive Rolex watch (£9 from Barnsley market) falls off into the toilet, swearing under your breath you rinse it and shove it into your pocket thinking to get it fixed later. With the toilet unblocked you squeeze a load of bleach into the toilet and leave in an even worse mood than when you arrived.

On the way home you decide to call into the Rose & Crown for a couple of halfs of best (£1.90 per pint) to relive you of the stress of dealing with such annoying tennants. You pay for your drinks and one for the new young barmaid and return home, now stuck in the rush hour so it takes you nearly twice as long as the first journey.

When you return home, and after returning the plunger and now half-empty bottle of bleach to under the kitchen sink, you make an entry in your leather-bound diary (birthday present from the wife) using an old bic biro (89p for 6 from Staples) you find lying about, and trudge up the stairs to the bedroom you use as a study, kicking the cat (free from RSPCA) on the way.

You plug in (Npower 8.49p per kwh as you've now on the cheaper tariff) your kids laptop (£299 from PC World), and make an entry in the Microsoft Excel (£69.99 Amazon) spreadsheet a friend designed for you (for a couple of pints and a cigar on a friday night).
Printing out the details on the old Epson colour printer, which never prints 'T' properly, but it was cheap (£25 cash from a man in the pub) and ink cartridges aren't too bad (£7.50 each for colour, £6.90 for black).

You then file the printout with the rest of your rental paperwork in your file that you keep in the drawer under your luxury double divan bed (£1,699.95 from EZ Beds), and fall exhausted onto the bed wondering whether it would be cheaper after all to let Eddie Estate Agent manage all your properties.

What can you claim from Tommy Taxman, and why?

[subjecttocontract]

You need a prize for the entertainment content in that post and an accountant to sort out so may queries.

You sure you aren't winding us up ?

[Cisnes]

You need a prize for the entertainment content in that post and an accountant to sort out so may queries.

You sure you aren't winding us up ?Whoooossshhhh!!

It was meant as a light-hearted way of putting across a serious point about the difficulty in quantifying incidental expenses.
If you think it's a wind-up than I aplogise.

For instance in previous posts you stated that you have a method for quantifying expenditure such as mobile phone calls, isp costs, cleaning materials and consummables.
On a serious note, I'd be interested in knowing what that method was if you wish to share it.

[subjecttocontract]

For instance in previous posts you stated that you have a method for quantifying expenditure such as mobile phone calls, isp costs, cleaning materials and consummables.
On a serious note, I'd be interested in knowing what that method was if you wish to share it.

My situation may differ to others in that I have quite a lot of properties and feel that some claims are easier to justify than someone with just 1 or 2 properties.

I've already covered how I claim for PC'c & mobile phones. Our mobiles are PAYG so, the initial cost is a capital expense and then the top up costs are easy to account for. Any cleaning materials & consumables are bought specifically for and used only in the business so we have reciepts. ISP & home telephone costs are usually claimed at 50%.

Travel costs....if using your own vehicle in my case, is claimed at 40p a mile. Items such as postage, photocopying, car parking are estimated with low nominal amounts claimed.

Use of your home as a office. Costs are calculated by adding up annual running your costs......mortgage, insurance, utilities, c/tax, maintenance etc and dividing by the number of habitable rooms.

[Cisnes]

Thank you.

Where do you get 40p per mile from?

Would an aggregate cost of incidentals of say £10 per property per month likely to be considered reasonable, or would, in your opinion, a breakdown of the individual items be necessary?

[subjecttocontract]

40p a mile is an amount provided by HMRC.....someone may come along shortly and provide the link to the HMRC web page that shows the figure.....I don't have it.

I think its important that you dont just automatically follow what someone else is doing. Everyone is different and your circumstances may dictate a different approach.

I couldn't comment on whether your suggestion would be acceptable.

[mind the gap]

You seem to be going out of your way to make it as complicated as possible for yourself. Just estimate what proportion of your usage of these technologies is 'personal/domestic' what proportion if any is 'my other job' and what proportion is 'my tenancy business-related'.

[Phlash]

Just and reasonable.

Using an appropriate proportion would be satisfactory. For instance you looked back 3 months and realised 25% of your calls related to business use, claim 25% of costs. Keep a record of how you came to justify the percentage, and annually check it for appropriateness.

40p per mile is the right amount to claim, for the first 10,000 miles. But the mileage should be solely for business use, not going to see a friend and subsequently pop into BTL. If going to the BTL on the way home you stopped off and picked up milk, this incidental personal use would be acceptable.

This should help you out:
http://www.hmrc.gov.uk/incometax/relief-self-emp.htm


Have a read here too:
http://www.propertyhawk.co.uk/index.php?page=magazine&id=232

[johnjw]

Your post 10 is very amusing but it does draw attention to a difficult area. It's good to know that "just and reasonable" estimates are acceptable and that the phrase "wholly and exclusively" doesn't mean that machines, journeys etc. must be 100% used for the rental business if they are to be charged at all, as expenditure