Chapter PIM1020

Published date10 April 2016
Record NumberPIM1020
CourtHM Revenue & Customs
UK property business - legislation

“UK property business” includes all activity for generating income from land in the UK and any transactions a taxpayer enters into connected with land. See section 264 of the Income Tax (Trading and Other Income) Act 2005 (for taxpayers in charge to income tax (IT)) and section 205 of the Corporation Tax Act 2009 (for taxpayers in charge to corporation tax (CT)).

A UK taxpayer may also have an overseas property business – see PIM1025.

For simplicity a property business is called a ‘rental business’ in this manual, though it can include other types of income as well as rents.

Rental business: what is it?

Profits from UK land or property are treated, for tax purposes, as arising from a business.

Since the 2017-18 tax year the cash basis (see PIM1090 onwards) is the default way of reporting the profits or losses of a property business for IT customers. However, profits or losses of a tax year must be calculated in accordance with GAAP if certain criteria are met - most notably if the landlord is a company or other CT customer (see PIM1100 onwards). Before this change however, the vast majority of landlords had to use GAAP.

The broad scheme is that rental business profits are computed using the same principles as for calculating the profits of a trade but the taxpayer is not actually treated as if they are trading – unless they meet the normal trading tests (see BIM60000). Thus, for example, CGT reliefs for traders are not normally available.

More information about rents and other receipts is given at PIM1050 onwards.

More information about the expenditure that can be deducted from receipts to arrive at taxable rental business profit is given at PIM1900 onwards.

Who carries on a rental business?

Any person or body of persons carries on a rental business if:

  • they own or have an interest in land or property in the UK; and
  • they enter into transactions that produce rents or other receipts liable to IT or CT from that land or property.

The list of those who carry on a rental business includes individuals, partners, trustees, personal representatives, trustees in bankruptcy, and non-resident companies subject to IT on their income from property. For more about trusts see PIM1045.

A person will carry on a rental business even if they engage an agent to handle it for them. The person carries on the business through the agent.

All rental business activities treated as one

In most cases all the various types of income from...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT