Insurance premium refund

We received a pro rata refund of an insurance premium as the property had been sold. Should this be declared in self assessment, and if so, should it be as income or negative expenditure?

Hi ,
 

Thanks for your question. If you have received a refund of an insurance premium due to sale of the property, I would suggest that in terms of allowable costs you would only declare the amount of the premium attributable to the rental business (i.e. 6/12 months), as the refund would in itself act as a form of relief for the period between sale and the end of the tax year. Thanks

Thanks for your response. Unfortunately I didn't really understand it. The insurance premium covered the whole rental building (mixed use residential/commercial rental). The premiums were recorded as outgoings in the 2023/24 self assessment. The building was sold during 2024/25 and the pro rata refund was also received in 2024/25. So we're happy to declare this full refund in our 2024/25 self assessment, as all of it relates to the rental business. But where should we record it - as property income or as a negative expenses for other property income or somewhere else? Many thanks.

Hi ,
 

Thanks for your question. It is my understanding that you made the insurance premium payment during the 2023/2024 tax year, which was included as an outgoing during the 2023/2024 Tax Return. You have then subsequently sold the property during the 2024/2025 tax year, in turn, received a pro rata repayment. As outlined previously, you would only declare the insurance premium amount for the period you owned the property during the 2024/2025 tax year (i.e. 5 months if sold in September). As you have received a direct repayment pro rata, you have in theory received relief by subject of repayment, so not necessary to be declared, only the apportioned amount between 6th April and the date of sale. Thanks