Is RTM exempted from tax?

Is unspent service charges contributed by flat owners of building exempted from tax?

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We have a RTM (right to manage) company operating on our own to manage a building of 9 flats. The only income of RTM is service charges contributed by leaseholders (flat owners) of the building. The money collected is incurred towards expenses for maintenance of the building - such as building insurance, cleaning fees, electricity charge, lift maintenance, entry door and equipment maintenance, and etc. The income and expenditure for the current reporting period are GPB12,664 and GPB3,893 respectively leaving a surplus GPB8,771. 

The surplus GPB8,771 is NOT PROFIT but in fact the unspent service charges collected from flat owners of the building. Is this unspent service charges GPB8,771 exempted from tax?

Replies (9)

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By David Ex
20th Jan 2024 12:34

I wouldn’t advise you go DIY personally.

https://www.gov.uk/set-up-property-management-company

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Replying to David Ex:
RLI
By lionofludesch
20th Jan 2024 15:09

I wouldn't either.

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Replying to David Ex:
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By KamLi
20th Jan 2024 15:35

But, I would like to ascertain whether unspent service charges contributed by flat owners is not counted as income and thus not subject to tax.

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By KamLi
20th Jan 2024 15:16

I would like to ascertain whether unspent service charges contributed by flat owners is not counted as income and thus not subject to tax.

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Replying to KamLi:
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By David Ex
20th Jan 2024 15:38

KamLi wrote:

I shall DIY filing a return to HRMC.

But, I would like to ascertain whether unspent service charges contributed by flat owners is not counted as income and thus not subject to tax.

You’re not doing it yourself if you need professional advice - which your question demonstrates you do. No shame in that.

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Replying to KamLi:
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By FactChecker
20th Jan 2024 15:40

If you're going to be "DIY filing a return to HRMC" (despite all the advice on here not to do so), who has prepared the Accounts (a sensible precursor to filing)?

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Replying to FactChecker:
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By KamLi
20th Jan 2024 15:51

A director of our RTM has prepared the accounts.

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Replying to KamLi:
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By FactChecker
20th Jan 2024 15:58

So how are the "unspent service charges" described therein - and where?

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Stepurhan
By stepurhan
20th Jan 2024 20:25

Let's get back to basics (though you still need an accountant).

If the costs of running the flats are only £3,893 then why did you collect service charges of £12.664? That and the legal agreements under which the company is set up (you do have those, right?) will form the basis of what can and can't be done as far as tax is concerned.

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