Rent

This Overheads code records the cost of rent incurred in running the business. As an expense account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, correcting an error or a refund received).

Real-world examples

Landlord has opted to tax

A retail unit's landlord has opted to tax the property, so rent is charged with VAT added even though commercial property rental is normally VAT-exempt — a quarterly invoice of £6,600 (£5,500 net) is a debit of £5,500 to 7100 (Rent), a debit of £1,100 to 2201 (Purchase Tax Control Account), and a credit of £6,600 to 2100 (Creditors Control Account). Opting to tax is entirely the landlord's choice, not the tenant's, so two otherwise identical units on the same high street can be charged completely differently.

Landlord hasn't opted to tax

Where a landlord hasn't opted to tax, commercial rent stays VAT-exempt and no VAT is added to the invoice — the same £5,500 quarterly rent is simply a debit of £5,500 to 7100 and a credit of £5,500 to 2100, with nothing posted to 2201. It's worth checking the actual invoice rather than assuming either way: a tenant that can't reclaim input VAT (because it makes exempt supplies itself) would actually prefer a landlord who hasn't opted to tax, to avoid an irrecoverable VAT cost.

Serviced office tenant

A consultancy renting a desk in a serviced office pays one all-inclusive monthly invoice covering rent, utilities and often reception and cleaning too — the whole £1,800 (£1,500 net) invoice is usually posted entirely to 7100 (Rent) as a debit of £1,500, a debit of £300 to 2201, and a credit of £1,800 to 2100, rather than trying to split out an electricity or cleaning element that isn't separately itemised on the bill.

Commonly confused with

Because code 7102 (Water Rates) sits right next to this one in Overheads, it's a common mis-posting target. Code 7100 is specifically for rent, while 7102 covers water rates — similar in nature, but keeping them separate is what makes the overheads section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Rent won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.

Other codes in Overheads