Property income

In this lesson

1. 0:00 Property income overview and scope
2. 0:25 What counts as property income
3. 1:16 Cash basis versus accruals assessment
4. 2:12 Allowable expenses for rental properties
5. 3:27 Capital versus revenue expenditure
6. 4:17 Interest relief on property loans
7. 5:14 Car expenses and mileage allowances
8. 6:07 Replacement of domestic items relief

About this lesson

This lesson covers the foundations of property income taxation, including rent, lease premiums, furnished holiday lets, and the distinction between cash and accruals basis. You'll also explore essential deductions like agent fees, repairs, insurance, and interest relief, plus the replacement of domestic items relief—a concept frequently tested in exams. Understanding these rules is vital for TX and ATX papers, where property income calculations form a core part of the syllabus and real-world tax planning. The lesson starts with the basics: what property income is and how it's treated for tax purposes. You'll see why all UK properties are now pooled together regardless of how they're furnished or let out, and when the accruals basis applies instead of the simpler cash basis. From there, you'll work through the detailed rules on allowable expenses—distinguishing between revenue costs (which reduce your income) and capital costs (which don't). A key focus is interest relief on property loans: non-residential properties get full relief, but residential properties are restricted to basic rate relief at 20%, a distinction that catches many students out. The lesson also covers practical deductions like car expenses, using either actual costs or statutory mileage rates, and the important replacement of domestic items relief, which limits you to like-for-like replacements at the cost of the old item, minus any sale proceeds. By the end, you'll have a clear framework for identifying what's deductible and what isn't—essential for tackling property income questions with confidence.

Duration: 7m