Expenses relating to the ending of a property rental - deductibilty

[DiamondEcho]

I've a flat in London that has been let in my absence of several years abroad. The flat was recently vacated, and it will remain vacant until we return to the UK and move in in 5-6 months time. I will be visiting London next week for the final hand-over from the agent. The trip will be 3 days and is solely for the purposes of the hand-over. During this visit I'll also attend to matters like sorting out to have the locks changed, and attending to any concerns re: boiler/plumbing/electrics, transfer of council tax/utilities etc. Ie. I believe the expenses of the trip fall under the 'wholly and exclusively' type and should be deductible vs tax on rental income.
I don't believe that I have made such a trip before solely for such a purpose, and was wondering if anyone knows what expenses from my trip would be deductible vs tax?

[PinkDalek]

I've a flat in London that has been let in my absence of several years abroad. The flat was recently vacated, and it will remain vacant until we return to the UK and move in in 5-6 months time. I will be visiting London next week for the final hand-over from the agent. The trip will be 3 days and is solely for the purposes of the hand-over. During this visit I'll also attend to matters like sorting out to have the locks changed, and attending to any concerns re: boiler/plumbing/electrics, transfer of council tax/utilities etc. Ie. I believe the expenses of the trip fall under the 'wholly and exclusively' type and should be deductible vs tax on rental income.
I don't believe that I have made such a trip before solely for such a purpose, and was wondering if anyone knows what expenses from my trip would be deductible vs tax?

I think you may be out of luck but is this the only property in your Property Business?

If so, I’d suggest any expenditure may not be deductible as the Property Business has ceased, as you’ve already decided not to relet. Random article on this/cessation:

https://www.property-tax-portal.co.uk/t ... le94.shtml

Further, depending on the exact relationship with your agent, might not your business ‘base’ be at the agent’s premises, as suggested by HMRC here:

https://www.gov.uk/hmrc-internal-manual ... al/pim2210

It also looks like a fair amount of your proposed expenditure relates to your future occupation, rather than the Property Business.

Can’t some of those things be done remotely in an any event?

I hope I haven’t been too negative. Hopefully, for you, someone will come along and tell me where I’ve gone wrong!

[PinkDalek]

More on HMRC's views on the Cessation of a Property business here:

https://www.gov.uk/hmrc-internal-manual ... al/pim2510

Extract only:

For example, if the business only consisted of letting a single house, it would cease when the tenant left and the taxpayer began to use the house as a private residence or, alternatively, when they decided the house wouldn’t be re-let.

[DiamondEcho]

I think you may be out of luck but is this the only property in your Property Business? If so, I’d suggest any expenditure may not be deductible as the Property Business has ceased, as you’ve already decided not to relet. Random article on this/cessation:
https://www.property-tax-portal.co.uk/t ... le94.shtml
Further, depending on the exact relationship with your agent, might not your business ‘base’ be at the agent’s premises, as suggested by HMRC here:
https://www.gov.uk/hmrc-internal-manual ... al/pim2210
It also looks like a fair amount of your proposed expenditure relates to your future occupation, rather than the Property Business. Can’t some of those things be done remotely in an any event?
I hope I haven’t been too negative. Hopefully, for you, someone will come along and tell me where I’ve gone wrong!

More on HMRC's views on the Cessation of a Property business here:
https://www.gov.uk/hmrc-internal-manual ... al/pim2510
Extract only: For example, if the business only consisted of letting a single house, it would cease when the tenant left and the taxpayer began to use the house as a private residence or, alternatively, when they decided the house wouldn’t be re-let.

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I very much appreciate your links and views, but I'm still feeling a bit 'conflicted'. The sole purpose of this trip is to take back possession of my home, which rightly or wrongly I do not consider fully handed over nor secure from the ex-agent.
re: 'doing things remotely'. It's a pretty large and good/central West London flat that's been let without me seeing the interior for many years. I don't think anyone without a 'trusted agent from heaven' would wrap up such a period of letting remotely; the level of trust needed would just be too high.
re: Business expenditure vs 'personal'/re: future occupation. This trip is about finalising the end of the last tenancy, the tenants left of their own accord at a time of their choosing (breaking their TA early). There is nothing recreational about this trip nor preparing for our future occupation, it's about the hand-over and ensuring the place is secure to my own knowledge rather than relying on an assurance from the ex-agent. I disagree that changing the lock pins/keys is unreasonable when ending a tenancy and wishing to live a distance away and be confident the place is secure. I'm quite sure there are other sets of keys for the place floating around in circulation right now. Imagine what an insurance company might think if you hadn't changed the locks in such circumstances and had someone with keys gain access and cause loss...
'My lettings business' used to consist of letting up to 5 homes in the borough in parallel over 20/+ years, my ex home included when I latterly moved abroad. I've wound it down and the one remaining was my home, and will be again come mid-year.

Your last point is an interesting one, 'when they decided the house wouldn’t be re-let.' After the tenant left I was offered a short-let basis during the present but declined it - just too much hassle I imagine. But as we're career roving 'expats' if we happened to get offered an attractive final 3yr relo somewhere we might just consider it. At which point my home would be re-let again. So I do wonder when the legal concept of a decision not to relet as considered formed is arrived at.

Anyway. What I'm trying to ascertain is whether my 'reasonable costs' on this trip are legitimate expenses or not. If they're not that's fine, but if they are I'd kick myself for not claiming them. I.e. I'm not trying and wangle a questionable expense, rather I simply don't want to ignore an entirely legitimate one.

Again thanks for your help, as said and as you might see I'm still not quite sure...

[genou]

After the tenant left I was offered a short-let basis... but declined it... But as we're career roving 'expats' if we happened to get offered an attractive final 3yr relo somewhere we might just consider it.

Which is pretty conclusive that you have decided to cease this letting. You may or may not have another letting in the future, but it will be a new enterprise......

[DiamondEcho]

Hmm - this trip is about finalising this last letting. I am unable to finalise it at arms length.
I see it as a parallel to the (allowable) expenses of winding up a business. But if the way I feel about it 'self-evidently misguided' I'll drop the matter, and just get on with the job at hand next week.

[PinkDalek]

Hmm - this trip is about finalising this last letting. I am unable to finalise it at arms length.
I see it as a parallel to the (allowable) expenses of winding up a business. But if the way I feel about it 'self-evidently misguided' I'll drop the matter, and just get on with the job at hand next week.

The point I mentioned about remotely was a throw away about such matters as changing the Council Tax/utilities payer.

More generally, I'm still not sure you can claim any expenses post cessation (if the business has already ceased), unless against post cessation receipts, as mentioned in one of the links previously provided, or in other limited circumstances.

Merely as another example, this from the Chartered institute of Taxation includes:

2.3.3 Finish date

The property income business ceases when there is no longer a property available for rent, and the landlord is not looking for tenants. This may be because the landlord has decided to occupy the property himself, or the property is left unoccupied to facilitate a quick sale. Any revenue expenses incurred in that final period, such as cleaning, council tax and utility bills, are not deductible from the rental income and are equally not deductible from the sale proceeds of the property as they represent revenue and not capital costs.

Source https://www.att.org.uk/sites/default/fi ... 202015.pdf

Your last point is an interesting one, 'when they decided the house wouldn’t be re-let.' After the tenant left I was offered a short-let basis during the present but declined it - just too much hassle I imagine. But as we're career roving 'expats' if we happened to get offered an attractive final 3yr relo somewhere we might just consider it. At which point my home would be re-let again. So I do wonder when the legal concept of a decision not to relet as considered formed is arrived at.

If you do relet within 3 years of the previous letting then the https://www.gov.uk/hmrc-internal-manual ... al/pim2510 link says:

A general rule of thumb for rental businesses is that the old business stops where there is an interval of more than three years and different properties are let in the taxpayer’s old and new activities. We offer this for guidance only. In practice, we will not normally suggest that the old business stopped where the gap is less than three years and the taxpayer was trying to continue.

Presumably if the same property is relet within the 3 years this would still apply but be aware of the comment again here https://www.property-tax-portal.co.uk/t ... le94.shtml which may or may not be applicable but is something to bear in mind:

However, the business may be regarded as ceasing and recommencing if the property is used as the taxpayer’s main residence between lets.

Come what may, good luck with your agent and the visit.