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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3814
Experience:  FCCA FCMA CGMA ACIS
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I have a number of Qs about how to declare income form a

Customer Question

I have a number of Qs about how to declare income form a furnished holiday let in EEA:
1. Do I include all income taken over period, or only income for letting within the period (I.e. Not include advance payments for future bookings)
2. What is the best way to treat Captial outlay? E.g. For exterior paining .... just lumped into other allowable property expenses?
3. Can I include flight costs if business related (I've supervising work being done?)
4. Can I deduct tax paid in Spain and how do I do that on the return?
5. Does tax paid in Spain include any IGIC (vat equivalent) or is that treated differently?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Jujst Answer, and pleased to be able to help you with your question.

1. Only the letting for the period. Advance bookings should be credited to a suspense account and then debited when the net rental is received.

2. Exterior painting is not a capital, but a revenue item, and is allowable against rentals in the Corporation Tax (CT) computation.

3. Yes, providing that the costs were wholly and necessarily incurred in the operations of the business [UK tax rules].

4. The UK and Spain have a Double Taxation Convention which precludes the same income stream being taxed in both jurisdictions. This is achieved by means of tax credits, the tax paid to one country being allowed as a tax credit against the liability in another on the same income stream. The Comvention does not protect you from differences in rates of taxation. You have to make a supplementary return on a Form SA106; this form makes provision for claiming Spanish tax credits.

5. Spanish VAT is an entirely different system and should not come into the UK taxation computations.

I do hope that you have found my reply of assistance.

Customer: replied 1 year ago.
I think I need a tax advisor / accountant!!!
Expert:  bigduckontax replied 1 year ago.

I fear that you might, but it will cost, well into 3 figures!

I am so sorry to have to rain on your parade.

Customer: replied 1 year ago.
It's the admission I'm not clever enough, rather than the cost Keith!In Spain I do a return quarterly, based on the income I take over that period.... but to be clear in the UK... My annual one for 6 April 15 - 5 April 16, needs to be based on payments taken at any time, for rental in that period? And any payment taken during that time for rental at other times, is assessed in the period the rental happens?I didn't see anything re CT on the self assessment, does that apply even if not running as a business? It simply says, 'if total property income is below £82k, add up your FHL expenses and put total in box 9' (Other allowable property expenses). I thought that meant I could add up everything - rates, bills, outlay on furniture replacement, painting etc etc?
Expert:  bigduckontax replied 1 year ago.

The rental in that period, ie the UK tax year which, to add insult to injury, differs from the Spanish!

Sorry for the misleading advice; delete reference to Corporation Tax and substitute income Tax; deep apologies for the error. You can indeed proceed as you suggest as your rental income is below the 82K; makes life much simpler.

Customer: replied 1 year ago.
That's better. So any cost on the allowable list. My original question was if there was a better way to treat big ticket items - so in Spain, I can spread things like redecorating or pool refurbishment over three years.I can lump it all in together though, no probs.And finally - the SA106 still applies for personal income tax credit against Spanish income tax payment
?
Expert:  bigduckontax replied 1 year ago.

Yes, you cannot spread it in the UK save by making a loss to be carried forward against future rental income only.

Yes, you have to complete a SA106 and you claim the Spanish tax credits on that form.

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
OK - thanks... you might have just made me clever enough to do it myself Keith.Many thank
Mark
Expert:  bigduckontax replied 1 year ago.

Delighted to have been of assistance, Mark.

Thank you for your support.

Customer: replied 1 year ago.
I did have other Q, if I am permitted. I have read conflicting info on capital allowances for furnished holiday lets. Can I included things like replacing old furniture? Or a washing machine? Some HMRC guidance says not, some days generally not unless a qualifying FHL. Ta.
Expert:  bigduckontax replied 1 year ago.

There is a good article here Mark, I suggest it worthy of perusal:

http://www.hls-solutions.com/capital-allowances

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