Part 3Property income
Chapter 10Post-cessation receipts
Charge to tax on post-cessation receipts
349Charge to tax on post-cessation receipts
Income tax is charged on post-cessation receipts arising from a UK property business.
350Extent of charge to tax
1
A post-cessation receipt is chargeable to tax under this Chapter only so far as the receipt is not otherwise chargeable to income or corporation tax.
2
Accordingly, a post-cessation receipt arising from a UK property business is not chargeable to tax under this Chapter so far as it is brought into account in calculating the profits of the business for any period.
351Income charged
1
Tax is charged under this Chapter on the full amount of the receipts received in the tax year.
2
This is subject to—
a
sections 254 and 255 (allowable deductions), and
b
section 257 (election to carry back),
which apply for the purposes of this Chapter as they apply for the purposes of Chapter 18 of Part 2 (but as if any reference to a trade were to a UK property business).
F83
Further to subsection (2), section 254 applies for the purposes of this Chapter as if for subsection (2A) of that section there were substituted—
2A
If the time immediately before the person permanently ceases to carry on the UK property business falls in a cash basis tax year, assume for the purposes of subsection (2) that the profits of the business are calculated on the cash basis.
4
For the purposes of sections 254 (as so applied) and 353, a tax year is “a cash basis tax year” in relation to a property business if the profits of the business for the tax year are calculated on the cash basis (see section 271D).
352Person liable
The person liable for any tax charged under this Chapter is the person receiving or entitled to the receipts.
Meaning of “post-cessation receipts”
353C1Basic meaning of “post-cessation receipt”
1
In this Chapter “post-cessation receipt” means a sum—
a
which is received after a person permanently ceases to carry on a UK property business, and
b
which arises from the carrying on of the business before the cessation.
F91A
If the time immediately before a person permanently ceases to carry on a UK property business falls in a cash basis tax year (see section 351(4)), a sum is to be treated as a post-cessation receipt only if it would have been brought into account in calculating the profits of the business on the cash basis had it been received at that time.
2
Subsection (3) applies if—
a
a firm carries on a UK property business,
b
a person ceases to be a partner in the firm, and
c
at least one of the persons with whom the partner carried on the business before ceasing to be a partner continues to carry it on afterwards.
3
The partner is treated for the purposes of this Chapter as permanently ceasing to carry on the business.
354C2Other rules about what counts as a “post-cessation receipt”
1
Section 355 (transfer of rights if transferee does not carry on UK property business) treats certain amounts as being, or not being, post-cessation receipts for the purposes of this Chapter.
2
The following provisions (which treat certain amounts as post-cessation receipts) apply for the purposes of this Chapter as they apply for the purposes of Chapter 18 of Part 2 (but as if any reference to a trade were to a UK property business)—
section 82(6) (contributions to local enterprise organisations or urban regeneration companies),
section 104(3) (distribution of assets of mutual concerns),
section 109(2) (receipt by donor or connected person of benefit attributable to certain gifts),
section 248 (debts paid after cessation) F1(reading the reference in subsection (3) to section 96 of ITA 2007 as a reference to section 125 of that Act) ,
section 249 (debts released after cessation), as qualified, where appropriate, by section 48(4) (car F7... hire), and
section 250 (receipts relating to post-cessation expenditure) F2(reading the reference in subsection (1) to section 96 of ITA 2007 as a reference to section 125 of that Act) .
3
This Chapter also needs to be read with—
a
section 310(3) (which treats certain amounts as not being post-cessation receipts), and
b
section 844 (which treats certain income as a post-cessation receipt: unremittable income).
355C3Transfer of rights if transferee does not carry on UK property business
1
This section applies if—
a
a person (“the transferor”) permanently ceases to carry on a UK property business,
b
the transferor transfers to another person (“the transferee”) for value the right to receive sums arising from the carrying on of any business (“the transferred business”) comprised in the transferor's UK property business, and
c
the transferee does not subsequently carry on the transferred business.
2
The transferor is treated as receiving a post-cessation receipt.
3
The amount of the receipt is—
a
the amount or value of the consideration for the transfer, if the transfer is at arm's length, or
b
the value of the rights transferred as between parties at arm's length, if the transfer is not at arm's length.
4
Any sums mentioned in subsection (1)(b) which are received after the cessation of the property business are not post-cessation receipts.
Supplementary
356C4Application to F3businesses within the charge to corporation tax
1
2
In this Chapter (except in section 355) any reference to a person permanently ceasing to carry on a UK property business F5includes, in the case of a company, the occurrence of an event treated under section 289 of CTA 2009 (company starting or ceasing to be within the charge to corporation tax) as the company permanently ceasing to carry on the business.
3
In applying any provision of Chapter 18 of Part 2 for the purposes of this Chapter references to the calculation of the profits of a trade for corporation tax purposes are to be read as references to the calculation of the profits of a F6UK property business for corporation tax purposes.