Explaining a rental deposit received from a tenant

This article describes how to explain a refundable deposit paid into your bank account from a tenant if you have an unincorporated landlord account in FreeAgent.

If you have a sole trader, partnership or limited company business type and you receive a rental deposit from a tenant, find out how to explain a rent deposit received from a tenant.

If you've returned a refundable deposit to one of your tenants, find out how to explain a rental deposit repaid to a tenant.

Explaining the money received from the tenant

When you receive the money from the tenant, select ‘Rental Deposits In’ as the transaction ‘Type’ and ‘Rental Deposits Received’ as the ‘Category.

Select ‘Explain transaction’ to complete the process.

Paying the deposit into a Tenancy Deposit Scheme

You may need to pay the tenant’s deposit into a Tenancy Deposit Scheme, which will hold the deposit for the duration of the tenancy. For more information on this process, please see HMRC’s guidance. If you’re unsure whether this applies to you, please ask your accountant or HMRC.

Once the money is paid out of your business bank account to the deposit scheme, select ‘Rental Deposits Out’ from the ‘Type’ drop-down menu and ‘Repayment under Rental Deposit Scheme’ from the ‘Category’ drop-down menu.

Select ‘Explain transaction’ to complete the process.

Once the tenancy ends and you need to pay the deposit back to the tenant, find out how to explain a rental deposit repaid to a tenant.