Tx notes fa22 Final

 
Example 1 
Jim bought a property and rented it out for the first time on 1 July 2022. The rent of £6,000 per 
annum is paid alternatively (1) quarterly in advance, or (2) quarterly in arrears.
He paid allowable expenses of £300 in November 2022 for redecoration and £500 in May 2023 for 
repairs completed in March 2023.
Calculate the Property Income assessment for 2022/23 and also compute the assessment if 
the taxpayer chose to use the accruals basis 

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1.2.
 
Allowable deductions 
(a)
To be allowable an expense must have been incurred 
wholly and exclusively
in connection 
with the business for example:
‣
insurance
‣
agents’ fees
‣
other management expenses, for example cleaning expenses
‣
repairs
‣
for motor expenses incurred the taxpayer may now use the HMRC approved mileage 
allowances (see chapter 9) which will be at 45p per mile instead of computing actual 
motor expenses incurred
‣
Finance expenses in relation to a residential property are NOT allowable expenses but 
see section 3 below - Finance expenses on property incomes - to see how tax relief is 
given in relation to such expenses.
(b)
Capital expenditure is not allowable:
‣
Repairs are allowable revenue expenses. 
‣
Improvements are capital and therefore disallowed
(c)
Capital allowances may be claimed for expenditure on plant and machinery used for the 
maintenance of the property.
(d)
If residential lettings are either partly or fully furnished, tax relief is usually given for the furniture 
and furnishings by way of