Bond received re UK Property Rental

jiltjilt Font Of All KnowledgeRegistered Posts: 2,903
A client receives income form renting out UK property I thought I had his all sussed however this client has paid back a bond to a tenant during the last tax year. Should a bond be treated as income when it is received and therefore added to the rent received figure and then included as an expense when it is repaid to the tenant?

As this flat was not let for the whole of the previous tax year (and the client cannot give me the exact dates it was let) I cannot tell from the rent received figure from the previous accountant's figures whether he would have included it as rent or not.

Have checked through the UK property notes of HMRC SA guide but cannot find any mention of bonds.

Comments

  • T.C.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    It would normally be held as a liability on the balance sheet, not included in income. It is not income unless the deposit is retained when the tenancy ends due to damage/rent arrears etc. I would not treat this as an expense, but would assume that it was lodged as a liability not as income.
  • jiltjilt Font Of All Knowledge Registered Posts: 2,903
    T.C. wrote: »
    It would normally be held as a liability on the balance sheet, not included in income. It is not income unless the deposit is retained when the tenancy ends due to damage/rent arrears etc. I would not treat this as an expense, but would assume that it was lodged as a liability not as income.

    Thanks TC that was my thought but as there was no balance sheet I couldn'y check this either.
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    T.C. wrote: »
    It would normally be held as a liability on the balance sheet, not included in income. It is not income unless the deposit is retained when the tenancy ends due to damage/rent arrears etc. I would not treat this as an expense, but would assume that it was lodged as a liability not as income.

    Yep that's my view too.
  • BHBBHB Settling In Nicely Registered Posts: 23
    I worked for a while at an estate agents who were also rental agents. A bond is not income and should be kept seperate from rent received. A bond does not belong to the landlord unless damage caused at the end of the tenancy equates to the amount of the bond, and the landlord can only take from the bond the amount required to cover repairs and the reminder must be repaid to the tenant.

    BHB
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