Why should I maintain records?
There are two reasons why you should keep records. Firstly it will tell you what is profitable and what is not, (and by how much) and secondly it will provide us with the information we need to prepare your accounts and deal with your tax. If you have just one or two properties you may not need to refer to the records to know whether or not they are profitable.
Records of all information used to complete tax returns must be kept for 22 months after the end of the tax year, or for 5 years and 10 months for those carrying on a business or who have income from letting out property. There is a maximum penalty of up to £3,000 for each tax year for which records have not been kept.
If you use a managing agent, then most of the relevant expenditure will appear on their statements, and this is generally sufficient for our purposes. We will ask you for details of expenditure (including loan interest) that may not appear on the agents statements – but usually this amounts to only a few items.
However, if you do not use a managing agent or you need to assess the profitability across a larger portfolio you will need to maintain a record of income and expenditure.
For some clients, keeping records is second nature while for others it is a real struggle that just gets in the way of running the business. We try to help where we can.
If you have a smaller portfolio and want to keep your own records, but are not sure how, then we can help. Our free record keeping template provides the landlord with a single property or a small portfolio with a convenient easy way to record income and expenditure. If you complete this, we can do the rest.
It comprises a spreadsheet for each property, and one for expenses that cannot be easily allocated to a single property.
For each property there is a column for each main type of income and expenditure, and several lines for each month. Completing it is easy. Each time you spend something, find the relevant column and go down the page until you get to the right month. Then just enter the figure. And that’s the end of it.
This system works well with smaller portfolios.