Personal Taxation Query/

Pigpen
Pigpen Registered Posts: 331 Dedicated contributor 🦉
Hi All
I am a little confused - Trying to do a test paper and the details of rental Income are as follows

"" Rental Income due £26400 (Of which £23100 actually received in the year, £1100.00 is not recoverable) ""

Well I know you have to use the accrued amount of rental income and not what was received i.e £26400 but what does the "of which £1100 is not recoverable" mean - What do I do with this?

I have re-read my books and just don't understand - Stuck now ?

Doh! Anyone got a clue? :crying:

Comments

  • Emma1708
    Emma1708 Registered Posts: 217 Dedicated contributor 🦉
    You would use £25300 as the rental income - which is the amount due less the 'bad debt' figure of £1100. You ignore when it has been received as rent is treated on an accruals basis

    Hope this helps
  • Emma1708
    Emma1708 Registered Posts: 217 Dedicated contributor 🦉
    Sorry, just realised you said you already knew it was on an accrual basis - I didnt read your post properly!

    Like I said though, the £1100 is a bad debt so can be deducted when calculating the amount assessable for tax purposes
  • Pigpen
    Pigpen Registered Posts: 331 Dedicated contributor 🦉
    Thanks Emma - Thats what I had done

    Next question - Is the wear and tear allowance of 10% then calculated on the Figure before or after deducting the bad debt?
  • Emma1708
    Emma1708 Registered Posts: 217 Dedicated contributor 🦉
    I cant find anything in my notes about that. However I would do it afterwards as I have 'W&T = 10% of assessable rent after rates and council tax deducted' and I would presume the assessable rent to be after the bad debt amount has been taken off.

    If I find anything during my revision either way I will post on here.

    Out of interest, which paper are you doing?

    x
  • Pigpen
    Pigpen Registered Posts: 331 Dedicated contributor 🦉
    Hi There

    Its a BPP Course Examination 2 - The one you sit once you have finished the text book and then post into them

    I just asked my FD and he said that he would deduct it on the accrued figure before the loss as it is specifically a wear and tear allowance and so should be on all rental due/accrued in the period as a tenant must have been living there and so wear and tear was "happening" if you get my meaning. The fact that he later didn't pay for whatever reason is irrelevant - according to him anyway. I can kinda see his point.
  • Emma1708
    Emma1708 Registered Posts: 217 Dedicated contributor 🦉
    That makes sense. Thanks for that
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