Part 3Property income

Chapter 3Profits of property businesses: basic rules

Apportionment of profits

275Apportionment etc. of profits to tax year

1

F3This section and sections 275A to 275C apply if a period of account of a property business does not coincide with a tax year.

2

Any of the following steps may be taken if they are necessary in order to arrive at the profits or losses of the tax year—

a

apportioning the profits or losses of a period of account to the parts of that period falling in different tax years, and

b

adding the profits or losses of a period of account (or part of a period) to profits or losses of other periods of account (or parts).

3

The steps must be taken by reference to the number of days in the periods concerned.

4

But the person carrying on the business may use a different way of measuring the length of the periods concerned if—

a

it is reasonable to do so, and

b

the way of measuring the length of periods is used consistently for the purposes of the business.

F25

Sections 275A and 275B contain rules for the purpose of avoiding the need to apportion profits or losses under this section (and section 275C makes provision for the person carrying on the business to elect for those rules not to apply).

275AF1Rule if person starts to carry on business after 31 March

1

This section applies if, in a tax year (“the relevant tax year”), the person carrying on the business—

a

starts to carry it on after 31 March, and

b

does not permanently cease to carry it on.

2

For the purposes of this Part—

a

the profits or losses of the business of the relevant tax year are treated as nil, and

b

the actual profits or losses of the business of the relevant tax year are treated as arising in the following tax year.

275BRule if there is a late accounting date

1

This section applies if, in a tax year (“the relevant tax year”), the person carrying on the business—

a

does not start to carry it on or starts to carry it on before 1 April,

b

does not permanently cease to carry it on, and

c

has an accounting date that is 31 March or 1, 2, 3 or 4 April.

2

For the purposes of this Part—

a

the profits or losses of the business of the period beginning with the day after the accounting date and ending with 5 April in the relevant tax year are treated as nil, and

b

the actual profits or losses of the business of that period are treated as arising in the following tax year.

3

In this section, “accounting date” in relation to a tax year means—

a

the date in the tax year to which accounts are drawn up, or

b

if there are two or more such dates, the latest of them.

275CElection to disapply late accounting date rules

1

The person carrying on the business may make an election under this section.

2

If an election under this section has effect for a tax year, neither of sections 275A and 275B apply in relation to the business for that tax year.

3

An election under this section—

a

must be made on or before the first anniversary of the normal self-assessment filing date for the first tax year for which it is to have effect, and

b

has effect for that tax year and the four tax years following that tax year (subject to subsection (4)).

4

If the person permanently ceases to carry on the business before the end of the last of the tax years mentioned in subsection (3)(b), the election has effect for each tax year up to and including the tax year immediately before the tax year in which the person permanently ceases to carry on the business.