Totally agree Chris
I feel like I’ve been on a bookkeeping and accounting crash course thanks to Cath.
Much appreciated.
Thanks Waqar
I’ve been using Landlord Vision’s spread sheet but it’s a bit glitchy in Open office.
Well accountants will charge you accordingly. Cath2 is an accountant it seems and she is more or less indicating some of the tax implications that we all face. You need to weigh the time, current taxation knowledge, learning curve about tax benefits and what you can claim along with the cost. Then cover the cost by spreading it over the year and adding it to your monthly rent at your next rent review at the end of your current AST. I send all my receipts, invoices, bank statements, bills, travel expenses etc to my accountant and let them do what their good at much quicker and better than I can particularly with a portfolio to manage.
Another thought for anyone doing their own returns. HMRC does webinars for landlords to explain landlord taxation. You can sign up for webinars and updates and see some of the past webinars here: Help and support for landlords - GOV.UK
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Thanks Cath
Your a star
I didn’t know about all that advice from hmrc.
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For one property if you’re Excel savvy, or willing just create a simple spreadsheet, if not the old fashion book format.
Multiple properties , yourself as above, an accountant or yourself using Quickbooks or Sage, the former is what we use.
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Great advice, thanks Chris
I don’t think he ment to. He was only 40 years old, found cheap alcohol & prescription drugs everywhere, some anti psychotic.
The police asked me to look for next of kin so I passed on an address book.
Also found records & parole appeals going back 10 years from just about every prison in the country which must of slipped his mind when he applied for the flat.
Btw I now make sure tenants are referenced.
Self Assessment tax return done & dusted with 4 1/2 hours till the deadline 
It’s been an eventful couple of weeks. Boiler at the flat stopped working which I fixed (low water pressure). My Kitchen roof started leaking during the storm & when I eventually sat down at the laptop with no distractions I heard a cracking noise coming from my fish tank.
After rescuing goldfish & repairing tank I worked through my allowable expenses & tonight tried to add them to my SA.
I probably should of mentioned at the start that my main expense is the repayment mortgage which is £135pm of which about £38 is interest & 25% of that is not a lot.
My total allowable expenses are less than £300 so I chose the personal property allowance of £1000…
I’d like to thank everyone who took the time to give me the benefit of your experience. I am now much better informed in tax & accounting & will be keeping my books up to date from now on. I’ve signed up to HMRC emails on relevant info & Landlord Law.
Hopefully I will be able to expand my portfolio in the future once I’ve got a couple of years experience.
For anyone that may be interested.
The scores on the doors, from year 1
Rental income £3,640
Taxable Profit £2,640
Tax £541
One last question, how do I work out the rental yield.
I paid the housing authority £21k for the flat in 2015 while living there.
Spent £2k on decorating & flooring before letting out in 2019.
I had the flat valued at £50k last year.
Stuart
Search the forums for yield -there are some Openrent posts on it.
My take on it…
There are lots of ways of calculating it. Eg gross, net, based on cost, based on value, based on investment.
I tend to look at gross yield when I’m looking at buying a property (gross rent/property price).
But then the true return on investment depends on how much you put in.
Eg if you buy a £100k property but you have a 75% mortgage, you probably end up investing about £30k with fees etc. If you get £500pm rent, then the simplest gross yield is 12x500/100000 =6% (but then there are variances in the calculation here to - eg do you add in the stamp duty etc). If you look at it in terms of return on investment, say you make a profit of £4,000 after costs, thats a return on investment of 4000/30000 = 13.33%.
But then, 10 years down the line, what’s your gross yield - do you base it on what you paid for the property, or do you base it on the value now. I’d always go for value now because that’s what it would be if you bought it now, so if you’re comparing investments you are comparing like with like.
Also, unless you remortgage upwards, based on value, your return on investment will usually go down over time (even though the rent will go up) because as the value of the property goes up, the amount you have invested in it goes up too. Eg if the value of your house doubles to £200k, you effectively then have £130k invested because if you sold it, that’s what you’d have (assuming an interest only mortgage and ignoring tax to keep it simple - I deduct the tax I’d have to pay if I sold - that usually is enough to put me off selling!). So if your profit also doubles to £8k, your return on investment is then 8/130 = 6.1%.
Bet you’re sorry you asked now - I do like my numbers 
.
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It never sounds that complicated on Homes under the hammer 
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PS You do know that (if you weren’t using the £1,000 allowance) you’d get a deduction for the other 75% of your mortgage interest as finance costs at 20% don’t you?
And that you can’t deduct any interest as an expense in 20-21, it will all be finance costs. The finance costs don’t come into the rental profit calc, they get deducted in the tax calculation at 20%, whether you are a 20/40/45% tax payer.
Also depending on circumstances, I might have claimed the decorating etc as deductible. PIM2505 - Property Income Manual - HMRC internal manual - GOV.UK (although I seem to remember you saying that you first let it last tax year, so they should have been deducted then if you were going to claim them).
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They usually use gross yield based on total cost including fees and renovation.
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Just tried the Landlord Vision rental yield calculator & it’s coming out at 22.29% gross.
Should I include tax in the net?
I wouldn’t normally, but you could.
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I’ve used my current tenant who’s paying £390pm
Not sure where that figure comes from.
If you look at it against the 21k you paid, it would be 3640/21000=17.3%, but against current value, 3640/50000=7.3%.
Ah I put £300 in the annual costs box for insurance etc
You don’t put any costs in if you claim the £1,000 allowance. I suspect the HMRC system would just ignore them if you did.
Yes that’s all done now thanks Cath. I was just trying to work out the yield so if I was tempted to go for another property I could go to the bank with a good asset.