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A Brief Guide to Recordkeeping for Landlords of Student HMOs

Are you new to student HMO market? Or maybe you’re a new landlord and would like some tips. Whether you do your own accounts or employ an accountant, there is always a need for good bookkeeping. It doesn’t matter how many properties you own and manage – 1 or 21, good bookkeeping is essential to the smooth running of your business.


The Records You Must Keep

The first and most obvious is all records of rentals and deposit payments received, no matter how they are received – cash or bank payment. In the case of deposits, you must place is in one of the official government schemes and provide details to the tenant(s).

You must also keep any other income related to the property’s rental. This would include any charges you make for services rendered such as maintenance. For student tenants, these are less likely to be incurred and should be deductible charges.

You should also keep receipts and other records for services for which you are liable – replacement flooring, structural repairs, safety checks, and replacing locks.


Conflicting Information About Timescales

How long should you keep your information? The rule of thumb is generally 7 years although HMRC has varied their advice for as little as five years. As tax goes increasingly digital, and easier to process, this should be far easier than it ever was. Digital receipts are increasingly becoming the norm for services. There is no need to print these off so long as you retain digital copies. Take photos of hard copy receipts in case they are lost or destroyed.

If you are selected for an HMRC investigation (these are usually random, not due to suspicion), it’s unlikely they will look further back than four years, hence the 5-year advice.


VAT Registration

There is no need to register for Value Added Tax (VAT) until you reach the current revenue threshold of £85,000 (for tax year 2019-20, goes up every year). If you fall under this, you can voluntarily register to pay VAT.

Further to above, some records must be digital for VAT registered businesses, paper copies are no longer sufficient. The full list of what you must keep in digital format is on the government website here.

Landlords choosing to use the VAT flat rate are not required to record all purchases unless they are logged as capital expenditures. Small purchases such as paint and tools, other small parts for upgrades under £50 are enterable as a single figure but for no more than £500.

On a final note, develop some good habits of automatically logging everything when you spend out or accept income. The more you do this, the less stressful things will be when it comes to the tax return period.