In the Course notes:
Allowable expenses:
Property A: 29 June 2012 Insurance for y/e 31/5/12 420
Property B: 29 June 2012 Insurance for y/e 31/5/12 585
Computation:
Property A: Insurance 10/12 × £420 350
Property B Insurance 10/12 × £585 487
My question:
As we are doing the property income computation for 2012/13 and the insurance is from the 01/6/11 to 31/5/12, shouldn't we include in our computation just the period from 06 April 2012 to 05 April 2013, and then 2 months (April and May 2012) instead of 10 months as in the course notes?
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Practice questions - Number 7
Hi Macha it's proving to be a good day for students identifying typing errors in updating the material!!
Peter only acquired the properties on 1 June 2012 so clearly the insurance being paid for should have been the year ended 31 May 2013 NOT 2012!!! On that basis we charge 10/12 of the annual insurance cost covering the period from acquisition (1 June 2012) through to end of tax year (5 April 2013)
Many thanks for bringing to my attention!
Oh yes, that's right. I did not take into consideration the acquisition date. It would have helped me to notice that it was just a typing error. Thank you very much.
No problem as it brought it to my attention and will help other students attempting that question - thanks.
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