PIM2205 | Deductions: main types of expense: rent paid out

The test for deductibility of rent is whether the rent in question is paid 'wholly and exclusively' for the purposes of the property business (see PIM2010). Where an identifiable part of an expense is wholly and exclusively incurred for the purposes of the property business that part can be deducted.

Where a landlord lets part of a property and occupies the rest themselves, the proportion of the rent they pay which relates to the let part may be allowed as an expense of the property business. That treatment should apply to any ground rent, rent-charge, ground annual or feu duty.

On the other hand, a landlord may have a property not all of which is let, but all of which is intended for letting. For example, in a house divided into flats, one flat maybe vacant for the time being. In such a case it may be accepted that all the rent is paid for the purposes of the property business.