Landlord insurance clients with a number of properties probably have accountants handling their tax returns. Those with just one or two rental houses often struggle to cope with the record keeping they need to do. It is not worth risking a tax investigation so it pays to keep detailed accounts and copies of all important documents.
Inexperienced property owners will find the Directgov.uk site helpful because it has a section aimed at helping landlords of let property to manage their tax
records. Basically you must keep copies of documents proving your income and expenditure- invoices, bank statements etc. Also keep copies of tenancy agreements so you can show when the tenancy started.
Even experienced buy to let landlords often slip up when it comes to proving “allowable expenses”, ie what you can set against your rents to reduce your tax. Some of the main items are:
Agents’ and accountants’ fees
Property insurance premiums for the building (and contents if appropriate)
Maintenance and repair (not improvements)
If in doubt speak to an accountant specialising in buy to let properties.
If you visit the directgov.uk site search for “Record-keeping for landlords”