I use Sage Instant Accounts to keep the books of the company I work for. We are a retail company, but have recently decided to rent some of our facilities to an outside company. This is only for a temporary period and will be a very small amount of income compared to our retail sales.
I am aware that this income should be accounted for separately to our normal retail sales because it is not a sale of goods and therefore needs not to be involved in the figures after stock-take at year end etc.
What I am not sure about is exactly how to account for it otherwise. My thought would be to post it to Misc Income. Would that be ok as long as it was sufficiently described?
I am also unsure if such a rental should have VAT charged on it?
Also, when doing the VAT return, should this income appear as part of Box 6 Total Sales as it is not strictly sales??
I hope this makes sense and thanks in advance for any help and suggestions...
Yes, you could post it to misc income or you could create a new sales nominal code for rental income.
The rent income may well be exempt income for VAT purposes. However, it could be subject to VAT if the company has 'opted to tax' the building(s) that are to be let out. You should talk to your employer (and the company's accountants) to confirm the correct treatment. If the rental income is exempt, the business will be partially exempt and so you'll need to consider whether there are any restrictions on reclaiming VAT on certain inputs.
Yes, the income should be shown in box 6. Section 3.7 of VAT Notice 700/12 runs through the items that should be included in box 6.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
