SolvedBIM00570 | Using this manual in computing property income
From HM Revenue & Customs · Business Income Manual
S272 Income Tax (Trading and Other Income) Act 2005, S210 Corporation Tax Act 2009
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 PIM1040 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 | BIM24550 onwards |
| Generally accepted accounting practice | BIM31000 onwards |
| Losses calculated on same basis as profits | BIM30500 onwards |
| Receipts and expenses | BIM30500 onwards |
| Change of accounting basis | BIM34000 onwards |
| Capital expenditure | BIM35000 onwards |
| Industrial development grants | BIM40465 |
| Sums recovered under insurance policies etc | BIM40750 onwards |
| Bad and doubtful debts | BIM42700 onwards |
| Crime-related payments | BIM43100 onwards |
| Employee benefit contributions | BIM44500 onwards |
| Business entertainment and gifts | BIM45000 onwards |
| Payroll deduction schemes: contributions to agents' expenses | BIM45195 |
| Payments to Export Credits Guarantee Department | BIM45580 |
| Interest (Income Tax payers) | BIM45650 onwards |
| Exclusion of double relief for interest | BIM45765 |
| Incidental costs of obtaining finance | BIM45800 onwards |
| Expenses connected with patents, designs and trade marks | BIM45950 onwards |
| Pre-trading expenses | BIM46350 onwards |
| Replacement and alteration of trade tools | BIM46960 |
| Payments for restrictive undertakings | BIM47005 |
| Counselling and retraining expenses | BIM47217 |
| Relief for the cost of training employees | BIM47080 |
| Penalties, interest and VAT surcharges | BIM47090 |
| Seconded employees | BIM47115 - BIM47120 |
| Unpaid remuneration | BIM47130 onwards |
| Redundancy payments etc | BIM47200 onwards |
| Expenses in connection with security | BIM47300 onwards |
| Contributions to local enterprise organisations or urban regeneration companies | BIM47610 |
| Car or motor cycle hire | BIM47700 onwards |
| Cessation, treatment on a complete change of partners | PM162000 onwards |
| Post-cessation receipts and expenses | BIM90000 onwards |