BIM00570 | Using this manual in computing property income
From HM Revenue & Customs · Business Income Manual
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Because the profits of a property business are calculated, for the purposes of Income Tax and Corporation Tax, in the same way as the profits of a trade, most of the guidance in the Business Income Manual applies to both trades and property businesses.
There are, however, some areas where the computation of property income is different to that for a trade:
for Income Tax, trade basis periods are not used (but see for partnerships);
there are separate rules on loss relief;
there are separate rules on lease premium relief;
for Corporation Tax, property business profits are calculated excluding items dealt with under the loan relationship and derivative contracts rules;
there are some statutory rules which apply only to property business profits, and these are covered in the Property Income Manual.
For avoidance of doubt the following sections of the Business Income Manual are relevant to property businesses:
| Issue | Page reference |
|---|---|
| Distribution of assets of mutual concerns | onwards |
| Generally accepted accounting practice | onwards |
| Losses calculated on same basis as profits | onwards |
| Receipts and expenses | onwards |
| Change of accounting basis | onwards |
| Capital expenditure | onwards |
| Industrial development grants | |
| Sums recovered under insurance policies etc | onwards |
| Bad and doubtful debts | onwards |
| Crime-related payments | onwards |
| Employee benefit contributions | onwards |
| Business entertainment and gifts | onwards |
| Payroll deduction schemes: contributions to agents' expenses | |
| Payments to Export Credits Guarantee Department | |
| Interest (Income Tax payers) | onwards |
| Exclusion of double relief for interest | |
| Incidental costs of obtaining finance | onwards |
| Expenses connected with patents, designs and trade marks | onwards |
| Pre-trading expenses | onwards |
| Replacement and alteration of trade tools | |
| Payments for restrictive undertakings | |
| Counselling and retraining expenses | |
| Relief for the cost of training employees | |
| Penalties, interest and VAT surcharges | |
| Seconded employees | - |
| Unpaid remuneration | onwards |
| Redundancy payments etc | onwards |
| Expenses in connection with security | onwards |
| Contributions to local enterprise organisations or urban regeneration companies | |
| Car or motor cycle hire | onwards |
| Cessation, treatment on a complete change of partners | onwards |
| Post-cessation receipts and expenses | onwards |