Hi All
Can someone just enlighten me as to whether bank charges should be restricted when calculating the finance charge restriction for rental properties?
This is for, say, a bank that charges £5 per month, or if the account is a 'business' account that charges for transactions
I've seen https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2054, but this does not specify the above. I have generally restricted it to avoid potential queries, but a colleague (who has since left) has allowed them!
Thanks
Jonathan.
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Replies (8)
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Bank charges, overdraft fees and overdraft interest are all excluded from the restriction. Stick it in other allowable expenses.
Me too. These charges would arise with or without the loan.
Our software lets you tell it whether s272A etc applies in relation to finance costs, so we don't need to stick it anywhere. If there's overdraft interest, you need to wonder why - and remember BIM45700.
It's not a cost relating to 'finance' - it's a cost of the bank providing banking services. You wouldn't reduce the expense if the property wasn't debt funded.