Rental Income - Is it the amount paid by the tenant to the agency or is it the amount agency pays to me?

Suppose the letting agency is collecting the rent every month and then they deduct the commission and they pay the remaining rent to my bank account, which amount I should use as my rental income?

For example the tenant is paying £500 on the 28th of every month to the letting agency’s bank account.
Agency then deducts £50 commission and transfers £450 to my account after a week or so.

When I calculate the total rental income which amount should I use as monthly income - £500 or £450 ?
If I am using cash basis accounting, I think it will be easier to go for the amount which comes to my bank account (£450) and date on which the amount appeared in my bank statement.


Your income is £500 and you have an expense to offset of £50.

It matters particularly if you are looking at claiming the £1,000 property income allowance because that has to be deducted before any costs. So, assuming a full year’s rental income, you’d have income of £6,000 less £1,000 property allowance not income of £5,400 less £1,000 property allowance.


If the letting agency generates the rent statement which shows they received £500 from the tenant and paid £450 to my account on the 28th of March 2021 (Tax Year: 2020-2021) , but the amount is credited in my bank account only on the 6th of April, 2021 (Tax Year: 2021-2022) , in which tax return should I include the rent £500 - 2020-2021 or 2021-2022?

Very good question.

Assuming you are using the cash basis, it’s illogical (because you might not know when the agent actually receives it and they might never pay it to you), but it’s the date the agent receives it that counts.

PIM1094 - Property Income Manual - HMRC internal manual - GOV.UK

"Amounts Paid to Agents on Behalf of the Landlord
Agents may take payments for rent on behalf of a landlord. For example, a residential landlord may use a property management company to collect rental payments, or a person with a furnished holiday letting business may list their property on a website that facilitates card payments on behalf of the owner.

If a landlord uses an agent to collect payments and calculates the profits of their property business under the cash basis, income will be recognised when it is paid to the agent and not when the agent passes this on to the landlord.

If the agent fails to pass on any payments, the income must still be recognised when it was paid to the agent."

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Thank you so much @Cath2