Another dumb tax return question (or 2) - rental property

[Dumbanddumber]

I work on a casual basis but I also own a property that is rented out. I've filled in the tax return but I wanted to clarify two points.

One is wear and tear on the rental property. Is it 10% of the net income ie less fees, maintenance etc?

Two is council tax. My tenant pays the council tax so am I right in thinking that it is not an allowable expense that I can claim?

Next time, I'm going to hire a tax specialist!

Are you paying council tax on the property as well as the tenant?

No, I am not. It's just that in the literature, I read somewhere that landlords could claim for council tax and I thought that doesn't sound right. I fully appreciate that I may not have understood.

You can claim ct if it was empty for a bit and you paid.

The 10% is 10% of the cost of the furniture, carpets etc which you will need to replace in time (I. E every ten years)

"The wear and tear allowance is calculated by taking 10% of the net rent received for the furnished residential accommodation. To find the ?net rent? you deduct charges and services that would normally be borne by a tenant but are, in fact, borne by the taxpayer (for example, council tax, water and sewerage rates etc). "

The above statement was the one that confused me. It doesn't make any sense if its the tenant that pays the council tax.

10% wear and tear is only available on fully furnished properties (I.e the ones where the landlord provides carpets, curtains, beds, tables etc). In these sorts of rentals it may sometimes happen that the landlord also pays for council tax and utilities and offers their tenant a flat rate fee. In those cases you need to deduct council tax from total income before calculating the 10% wear and tear. This doesn't apply to most lettings though

Wear and tear is 10% of the 'net rent' which is the whole rent less any part of the rent that pays for something that would normally be borne by the tenant. So if the rent is inclusive of council tax, services, service charge etc then you have to deduct these, but nothing else.

You can only include as allowable expenses costs you actually incur (except for the 10% allowance) - how could council tax that your tenant pays be an "allowable expense", it is not even an expense!

Thanks for the info. MrAnchovy, completely agree that it can't be an allowable expense when tenant paying it, that is why I was questioning it - just the literature confusing me.

So in my case, my wear and tear will look like this:

Gross rent less (ground rent + service charge) = net rent (10% of)

Woah sorry, I was wrong.

The only items that need to be deducted from gross rent to arrive at the figure for calculating wear and tear are items which "in the case of a furnished letting, [are] normally borne by the lessee" (lessee in this context meaning your tenant)

Ground rent and service charge are not normally, or indeed ever, borne by a tenant - the freeholder has no contract with the tenant so they couldn't be - so in your case gross rent = net rent for this purpose.

I can't think of anything other than council tax (if you let a House in Multiple Occupation for instance) or water rates and utilities (if the rent is inclusive of these, for instance short-term lets that are not holiday lets) that would "normally be borne by the lessee".

So to be clear (in case someone hits this in the future):

Wear and tear is 10% of the 'net rent'.

'Net rent' for this purpose is usually the same as 'gross rent' but if the rent your tenant pays to you includes something that a tenant would normally pay themselves (e.g. council tax, water rates or utilities) then you have to deduct these.

Note that the wear and tear allowance only applies to furnished lettings, and if you claim it you cannot claim (now or in the past or future) for items which are classed as furnishings.

Got it! Yes, so my gross income is classed as net income in this case. Thank you so much :)