Accounting for Landlord Tax as rental agent

Accounting
1

We are an Agent with several Overseas Landlords.

We have to pay tax on their behalf every quarter. THis id difficult for two reasoons.

  1. There is no tax category available except PAYE and Vat.

  2. We cannot get the loan accounts for each property to ‘net out’ to Zero as it should be.

Any help would be most welcome as to how we should account for this as the tax patyments seem to be added to our turnover..

Thanks

2

So you receive rent from their tenants, pay some of it to them and hold some of it back to pay to HMRC? You should be able to create a new assets & liabilities nominal code in your chart of accounts to represent the withheld tax.

  • when a tenant pays you rent that is a transfer from the property loan account to your current account as normal
  • your commission is an invoice paid into the property account
  • your net payouts to the landlord are transfers from current account to the property account
  • you’d create a manual “money in” transaction on the property account for the withheld tax to net everything off - tag that as “something not on the list” to your new landlord tax nominal code
  • when you pay over the withheld tax to HMRC then that money out of your current account would again be tagged “something not on the list” to the same landlord tax nominal
3

Thanks very much Ian, I was working on a similar idea, but I think I was doing it slightly incorrectly. Now I have a better understanding (thanks to your help) hopefully I can net it all off now.

I need to something similar for the repairs and other deductions where applicable as well.

Many thanks