Bond received re UK Property Rental

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jilt
jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
in General accounting discussion
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.

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  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
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    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.
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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    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.
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    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.
  • BHB
    BHB Registered Posts: 23 New contributor 🐸
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    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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