Saving tax - payment in kind

Landlords who have industrious or creative tenants may benefit from their endeavours.

Where do professional landlords go for landlords insurance?

This is through a little know tax principle known as 'payment in kind'.

For instance if a tenant does some DIY. One of my tenants rebuilt his previous landlord's fireplace. In that situation a landlord should ensure that they allocate the work a fair and reasonable cash value.

An example would be where a tenant does some decorating to help you the landlord out and also to brighten up their rental place. The tenant therefore spends £20 on paint and also spends a day decorating. Allocate this a reasonable value. Materials £20 and a days work £80 equalling £100.

No matter what form the payment takes, it still has a cash value and that cash value goes into the accounts as income.

A landlord should remember to keep a note with the accounts of how they arrived at the cash value, so if the taxman enquires then you are able to provide evidence of the 'payment in kind'.