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Cash basis for rental income - date of receipt

Cash basis for rental income - what is date of receipt? When agent receives money or landlord?

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Clients (spouses)  are about to start renting out their property in London to a new Tenant. Tenancy will start on March 30th. Approx 10,000 per month.

The tenany has offered to pay 6 months rent up front. It makes sense from a tax perspective for this rent to go on both their 2019/20 tax returns.

On a cash basis what is the earliest they should receive the rent (is 1st April okay or does it have to be on or after 6th April?) and is it the date the letting agent receives the money that matters OR the date the landlord getrs the money from the agent?

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By jcace
26th Mar 2019 07:40

For receipts basis, it's the date the agent receives payment that counts - see PIM 1094.
The tax year ends on 5 April.

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By atleastisoundknowledgable...
26th Mar 2019 07:52

£10k pcm? What’s their property? Buckingham Palace?

That said, I’ve a new client who’s renting his 1 flat London flat for £2.5k pcm.

Glad I don’t live in London. And not just ‘cos of house prices.

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By Jholm
26th Mar 2019 08:53

Bear in mind (if they have other properties), cash basis can only be claimed if gross rents do not exceed £150,000 in the year.

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Replying to Jholm:
By tonycourt
28th Mar 2019 13:58

Just a point of order.

Cash basis doesn't need to be claimed, it is the default unless receipts exceed £150,000 per year. Thus, if you want to use GAAP you need to make an election.

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Hallerud at Easter
26th Mar 2019 09:56

I would,on a gut basis, say that the agent receiving funds is the equivalent of the principal receiving funds, the agent acting in stead of the principal re the contract, accordingly it is, imho, this date that applies.

If the tenant paid the funds to the agent who then did a runner with the money and the landlord then refused the tenant entry ,would the tenant have a case against the landlord for breach of contract? In my opinion he would, the agent acts as if he were the landlord vis a vis the formation of a contract between tenant and landlord.

(Based on a very sketchy recollection of agency law that has barely been used in thirty five years)

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