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Rent a room rental income 13 months

Cash basis?

Rent a room scheme used. Rental income- Client received rental income for April 2018  in March 2018 so 13 months rental income received in the tax year. Do I need to include 13 months income in the tax return under the cash basis even though one of the months relates to next tax year?

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By OC
07th Dec 2018 07:22

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1101

does this help?

When are receipts included in the profit and loss computation?

Receipts are recognised in accordance with normal accountancy principles. This means that a customer includes all incomings earned in the tax year regardless of when they are due or when they are received. For a trading or professional partnership it is normally the incomings of the accounting period ending in the tax year that are included, not the year to 5 April (PIM1040).

Rent is not brought into a year’s tax computation merely because it is received in the year or because it is due to be paid in the year. Equally, rent is not excluded merely because it is received outside the tax year or it is due outside the tax year. The proportion of the rent which is earned in the year from the tenant’s use of the property in the year should be brought into the profit and loss account and the proportion which is earned from the tenant’s right to use the property outside the year should be excluded.

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to OC
07th Dec 2018 07:38

OP was enquiring about the cash basis.

OP, why not elect for GAAP basis?
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1092

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By Matrix
to OC
07th Dec 2018 13:59

The cash basis is now mandatory unless elected otherwise - it no longer follows what we have always understood to be normal accounting principles.

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to Matrix
07th Dec 2018 14:16

It's hardly mandatory if you can opt out.

Cash basis is simply the default position.

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By Matrix
to lionofludesch
07th Dec 2018 14:23

Well you can't just follow OC's advice which had not been pointed out in this thread.

I will get back to tax returns instead of helping anonymous posters.

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to Matrix
07th Dec 2018 14:38

Quote:

Well you can't just follow OC's advice which had not been pointed out in this thread.

Point taken.

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07th Dec 2018 12:06

Yes - that's what cash basis means.

Obviously, as Wanderer says, you can opt for accruals if you want.

Just be consistent from year to year.

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to lionofludesch
07th Dec 2018 13:40

You don't have to be consistent, you can chose each year if you want to, but you must account for any "gaps" when moving from one basis to the next.

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