Direct tax treatment of property ownership

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This subtopic covers the direct tax treatment (ie corporation tax, income tax and capital gains tax treatment) of owning freehold or leasehold property, primarily in the UK. There are a number of relevant considerations, including:

  1. •

    whether the taxpayer is trading (ie dealing), or investing, in property

  2. •

    the nature of the taxpayer (eg an individual, company or unit trust)

  3. •

    the principles of computing income tax, corporation tax or capital gains tax (as appropriate) on rental income, and the proceeds of sale, from property

  4. •

    the extent to which non-UK residents owning UK property are subject to direct taxation in the UK, and

  5. •

    the application of the UK's anti-avoidance measures to property owners

Trading or investing in property

Whether a taxpayer is investing or trading (ie dealing) in property is key to determining how they are taxed. This distinction is relevant in many circumstances, eg it will be significant for the owner of a property who is considering selling it, as well as for the purchaser of shares in a company that owns a property asset (to assess the company's potential future tax liabilities).

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Tax weekly highlights—19 June 2025

This week's edition of Tax weekly highlights includes: (1) News Analyses on the FTT decisions in Eastern Power Networks, Moffat and Performance Leads, (2) HMRC’s new guidance on cost contribution agreements under the advance pricing agreement programme, (3) HMRC’s direction extending the deadline for making a final VAT return, (4) HMRC’s change of policy on VAT deductions in relation to the management of pension funds, and (5) HM Treasury’s policy paper on ‘Tax policy making principles’.

FTT rejects taxpayers’ claims for entrepreneurs’ relief (Moffat and another v HMRC)

Tax analysis: In Moffat, the First-tier Tax Tribunal (FTT) held that the taxpayers’ claims for entrepreneurs’ relief (now business asset disposal relief) on the disposal of shares in a company did not succeed because the company was not the holding company of a trading group. The FTT, however, allowed their appeal against penalties imposed by HMRC in respect of the claims, holding that the taxpayers had not behaved carelessly.

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