Part 4Property income
Chapter 3Profits of property businesses: basic rules
Charge to tax on profits of a property business
209Charge to tax on profits of a property business
The charge to corporation tax on income applies to the profits of a property business.
Calculation of profits
210Profits of a property business: application of trading income rules
(1)
The profits of a property business are calculated in the same way as the profits of a trade.
(2)
But the provisions of Part 3 (trading income) which apply as a result of subsection (1) are limited to the following—
In Chapter 3 (basic rules)— | |
|---|---|
section 46 | generally accepted accounting practice |
section 47 | losses calculated on same basis as profits |
section 48 | receipts and expenses |
section 52 | apportionment etc of profits and losses to accounting period |
In Chapter 4 (rules restricting deductions)— | |
section 53 | capital expenditure |
section 54 | expenses not wholly and exclusively for trade and unconnected losses |
section 55 | bad debts |
sections 56 to 58 | car or motor cycle hire |
section 59 | patent royalties |
In Chapter 5 (rules allowing deductions)— | |
section 61 | pre-trading expenses |
section 68 | replacement and alteration of trade tools |
section 69 | payments for restrictive undertakings |
sections 70 and 71 | seconded employees |
section 72 | payroll deduction schemes: contributions to agents' expenses |
sections 73 to 75 | counselling and retraining expenses |
sections 76 to 81 | redundancy payments etc |
sections 82 to 86 | contributions to local enterprise organisations or urban regeneration companies |
sections 87 and 88 | scientific research |
sections 89 and 90 | expenses connected with patents, designs and trade marks |
section 91 | payments to Export Credits Guarantee Department |
section 92 | levies under FISMA 2000 |
In Chapter 6 (receipts)— | |
section 93 | capital receipts |
section 94 | debts incurred and later released |
section 101 | distribution of assets of mutual concerns |
section 102 | industrial development grants |
section 103 | sums recovered under insurance policies etc |
section 104 | repayments under FISMA 2000 |
In Chapter 7 (gifts to charities etc)— | |
section 108 | receipt of benefits by donor or connected person |
In Chapter 9 (other specific trades)— | |
section 131 | incidental costs of issuing qualifying shares (building societies) |
section 133 | annual payments paid by a credit union |
In Chapter 12 (deductions from profits)— | |
sections 172 to 175 | unremittable amounts |
211Loan relationships and derivative contracts
(1)
The profits of a property business are calculated without regard to items giving rise to—
(a)
credits or debits within Part 5 (loan relationships), or
(b)
credits or debits within Part 7 (derivative contracts).
(2)
This section does not affect the width of the provision made by—
(a)
section 464 (priority of Part 5 for corporation tax purposes), or
(b)
section 699 (priority of Part 7 for corporation tax purposes).
212Items treated as receipts and expenses
The rules for calculating the profits of a property business need to be read with—
(a)
the provisions of CAA 2001 which treat allowances as expenses of a property business,
(b)
the provisions of CAA 2001 which treat charges as receipts of a property business, and
(c)
section 748 (credits and debits in respect of an intangible fixed asset held by a company for the purposes of a property business carried on by it treated as receipts and expenses of the business).
213Certain amounts brought into account under Part 3
(1)
The rules for calculating the profits of a property business need to be read with the following provisions of Part 3 (trading income)—
(a)
section 42 (tied premises),
(b)
section 43 (caravan sites where trade carried on),
(c)
section 44 (surplus business accommodation), and
(d)
section 45(3) (payments for wayleaves).
(2)
Those provisions secure that amounts which would otherwise be brought into account in calculating the profits of the business are, or may be, brought into account instead in calculating the profits of a trade.
214Relationship between rules prohibiting and allowing deductions
(1)
Any relevant permissive rule in this Part—
(a)
has priority over any relevant prohibitive rule, but
(b)
is subject to the following provisions—
(i)
section 56 (car or motor cycle hire), as applied by section 210,
(ii)
section 1288 (unpaid remuneration),
(iii)
section 1290 (employee benefit contributions),
(iv)
section 1304 (crime-related payments).
(2)
In this section “any relevant permissive rule in this Part” means any provision of this Part (apart from sections 231 to 234) which allows a deduction in calculating the profits of a property business.
(3)
In this section “any relevant prohibitive rule”, in relation to any deduction, means any provision of this Part or Chapter 1 of Part 20 (apart from those mentioned in subsection (1)(b)) which might otherwise be read as—
(a)
prohibiting or deferring the deduction, or
(b)
restricting the amount of the deduction.
(4)
In this section any reference to any provision of this Part includes any provision applied by section 210.