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How Do I Account for Rent in Advance?

Question If my tenant pays me 6 months’ rent in advance in March 2011 do I:

a) Put the whole amount in my tax return for the tax year 2010/2011,
b) Apportion it, i.e. 1 month in 2010/2011 and 5 months in 2011/2012,
c) Choose either option to suit my tax circumstances?

Arthur Weller Replies:
If you look on page PIM1101 (http://www.hmrc.gov.uk/manuals/pimmanual/pim1101.htm) on the HMRC Property Income Manual you can see that your second option 'b' is the correct treatment. It requires apportionment in a similar way to trading income.

Property Tax Insider This sample question and answer is taken from Property Tax Insider, a monthly UK tax saving magazine for landlords and property investors.

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