A property business is one which generates income from land (see below as to the meaning of generating income from land) and includes every transaction entered into for that purpose. For example, a trust could own rental properties as investments or there could be a rental property in the estate of a deceased person.

The profits of a property business are charged to income tax by section 268 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005). Receipts of a UK property business which are also receipts of a trade within ITTOIA 2005, Pt 2 (ie receipts that could fall within either the property or trading income rules) are required to be taxed under the property income rules. This Practice Note does not cover the tax treatment of trading in land and assumes that the property income derives from investment activity.

The same general income tax principles of property businesses apply to persons, whether they are individuals, trustees or PRs. The principles as they apply to trustees and PRs are discussed