Recording rental income

[Tigris]

Hey,

i've just started using Quickfile to record rental income.

When the estate agents send over the money, they send over the rent minus their cut. Some months there is also repair payments for certain trades such as plumbers etc.

Should I be recording the total income as well as showing all deductions for each trade?

In the past i've just recorded the net amount which ends in the business bank. I know there are tax deductions to be had but surely not if the money never entered the back account in the first place?

Cheers.

 

[Newchodge]

I would record it all - set up the estate agent and each tradesman as a supplier and enter all the details. What happens about VAT?

 

[Tigris]

I would record it all - set up the estate agent and each tradesman as a supplier and enter all the details. What happens about VAT?

Thank you.

I'm not VAT registered?

 

[Newchodge]

Thank you.

I'm not VAT registered?

No, but some of your suppliers may be, so the agent invoice should show VAT. As you're not registered, you cannot do anything about it, but, as a business you should know if you have been charged VAT.

 

[DWS]

No, but some of your suppliers may be, so the agent invoice should show VAT. As you're not registered, you cannot do anything about it, but, as a business you should know if you have been charged VAT.

No, but some of your suppliers may be, so the agent invoice should show VAT. As you're not registered, you cannot do anything about it, but, as a business you should know if you have been charged VAT.

Why? If they are not VAT registered what does it have to do with anything?

 

[Newchodge]

Why? If they are not VAT registered what does it have to do with anything?

I believe that knowing all available information helps to make decisions. For example, further down the line the OP may want to consider VAT registration. If none of the suppliers is VAT registered, that may have a bearing on the decision. If the information is there on the invoice, why not record it?

 

[Ziggy2024]

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If it is residential income then there it will be exempt so VAT isn't an issue but the principle is correct.

You need to separate the expenses from the income and show these separately on your bookkeeping / tax returns. The income needs to be the gross amount.

 

[DWS]

I believe that knowing all available information helps to make decisions. For example, further down the line the OP may want to consider VAT registration. If none of the suppliers is VAT registered, that may have a bearing on the decision. If the information is there on the invoice, why not record it?

Record it how?
Are you really suggesting that every non VAT registered business should account for any VAT on receipts in their bookkeeping and then what? add it back to do the accounts?
Crazy idea!

 

[numbersrule]

Record it how?
Are you really suggesting that every non VAT registered business should account for any VAT on receipts in their bookkeeping and then what? add it back to do the accounts?
Crazy idea!

The OP sounds like this may be long term residential lettings which are not in scope for VAT ( currently ).

Supposing the Chancellor decides to bring long term residential lettings in scope for VAT sometime in the future?

In that scenario it would be useful to have VAT data available to understand the position.

In any event, the principle is correct in that Accounts should always show Total Income and Total Expenditure and not some 'netted off' version of lesser income and expenditure.

The way I would record this in the current situation is to enter the expenditure items as Bills in QuickFile with the amount shown as the Gross Amount including the VAT but record it as No VAT, because the business is not VAT Registered. Then I would attach a PDF of the Bill to the Bill in QuickFile as the correct financial record.

Another reason that Total Income and Total Expenditure should be recorded correctly is so that the business owner can understand which year they need to register for Making Tax Digital for Income Tax because the applicability of MTD for IT is based on 50k, 30k and 20k bands of Income for the next 3 years.

 

[DWS]

The OP sounds like this may be long term residential lettings which are not in scope for VAT ( currently ).

Supposing the Chancellor decides to bring long term residential lettings in scope for VAT sometime in the future?

In that scenario it would be useful to have VAT data available to understand the position.

In any event, the principle is correct in that Accounts should always show Total Income and Total Expenditure and not some 'netted off' version of lesser income and expenditure.

The way I would record this in the current situation is to enter the expenditure items as Bills in QuickFile with the amount shown as the Gross Amount including the VAT but record it as No VAT, because the business is not VAT Registered. Then I would attach a PDF of the Bill to the Bill in QuickFile as the correct financial record.

Another reason that Total Income and Total Expenditure should be recorded correctly is so that the business owner can understand which year they need to register for Making Tax Digital for Income Tax because the applicability of MTD for IT is based on 50k, 30k and 20k bands of Income for the next 3 years.

I am not taking about recording the suppliers invoices, yes obviously they need recording along with the gross income.
I am questioning the VAT element, there is no need to mention this anywhere as it has no bearing on the accounts.

 

[numbersrule]

I am not taking about recording the suppliers invoices, yes obviously they need recording along with the gross income.
I am questioning the VAT element, there is no need to mention this anywhere as it has no bearing on the accounts.

Yes, I know what you mean.
If Tigris wishes to completely ignore the VAT then they can uncheck the 'VAT Registered' option in their settings. That way VAT is completely excluded from all transactions and thereby avoids accidental errors with VAT.
But I still agree with Newchodge that it makes sense to keep a copy of all Purchase Invoices with VAT on in case they are needed in the future.

 

[DWS]

But I still agree with Newchodge that it makes sense to keep a copy of all Purchase Invoices with VAT on in case they are needed in the future.

You need to keep copies of all the purchase Invoices anyway whether they have VAT on them or not!