Do I include rental income net of agent fees

Flat rate scheme and rental income

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I have a client who is registered for the flat rate scheme and has a little bit of rental income which is also included in the turnover to calculate the VAT due to HMRC.   She has a letting agent and I am wondering if I have to include the gross rent or could use the net rent for inclusion for the purposes of the flat rate calculation.  Hitherto I used the gross rent but I wonder if this is incorrect.  Does anyone know the answer?

Many thanks

 

 

 

Replies (4)

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By Tim Vane
02nd Nov 2018 13:10

Are you asking whether turnover is net of expenses or not?

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Replying to Tim Vane:
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By Tax Dragon
03rd Nov 2018 07:53

I think this is my favourite Aweb TV moment. Glad I tuned in to this episode - still making me smile.

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chips_at_mattersey
By Les Howard
02nd Nov 2018 18:50

Gross rent is correct for FRS turnover.
As a rule of thumb, the FRS does not work with rental income, as it increases the overall amount of VAT due. Have you done your sums?

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By Matrix
03rd Nov 2018 08:09

There would have to be an advantageous flat rate to make staying in the scheme worthwhile. If it is a limited cost trader surely the VAT on your fees and the letting agent's fees would be more than the .2% saved under the scheme even before adding the VAT on the rent. Since a partially exempt business can also claim VAT on the exempt supplies subject to certain limits. Maybe it is a cafe or similar and the rental income is v small and you have done your calculations.

You are doing it correctly by including the gross rent.

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