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Legislation
Income Tax (Trading and Other Income) Act 2005

Crossheading Alternative calculation of profits if amount exceeds limit

  • Section 795 Alternative calculation of profits: introduction
  • Section 796 Alternative calculation of profits: trading income
  • Section 797 Alternative calculation of profits: property income
  • Section 798 Alternative calculation of profits: income chargeable under Chapter 8 of Part 5
  1. Alternative calculation of profits if amount exceeds limit
  2. Alternative calculation of profits: property income

Section 797 | Alternative calculation of profits: property income

From legislation.gov.uk

(1)This section applies if the individual has any rent-a-room receipts for the tax year (“Part 3 rent-a-room receipts”) which are to be brought into account in calculating the profits of a UK property business.

(2)In calculating those profits for the tax year—

(a)the Part 3 rent-a-room receipts for the tax year are brought into account only in calculating the profits of the business for the tax year, and

(b)any expenses associated with those receipts are not brought into account.

(3)In calculating those profits for the tax year—

(a)a deduction is allowed, and

(b)no relevant allowance, but any relevant balancing charge, is made.

(4)The amount of the deduction—

(a)is L if all the individual's rent-a-room receipts for the tax year are Part 3 rent-a-room receipts, and

(b)otherwise, is—

Formula

L×PR

but, in either case, subject to a maximum of P.

(5)In subsection (4)—

L is the individual's limit for the tax year,

P is the individual's Part 3 rent-a-room receipts for the tax year, and

R is all the individual's rent-a-room receipts for the tax year.

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