The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
Property income can arise in many forms but it is primarily composed of rental receipts and lease premiums. The profits of a property business are calculated in the same way as the profits of a trade. A long list of the applicable provisions taken from CTA 2009, Part 3 is given in the table set out in CTA 2009, s 210. Finance Act 2016, s 71 has added a provision (see CTA 2009, s 49A) to this table to confirm that income received in money’s worth is also taxable. This amendment to statute applies to transactions on or after 16 March 2016 although this is only confirming existing case law treatment. See the Trading income ― general principles guidance note for further details.
The taxation of lease premiums is dealt with in the Premiums on leases guidance note.
A UK company’s UK property business consists of ‘every business which the company carries on for generating income from land in the UK, and every transaction which the company enters into for that purpose otherwise than in the course of such a business’.
For corporation tax purposes, all rental income from UK property is grouped and taxed together under the provisions of CTA 2009, Part 4. Profits must be computed in accordance with GAAP, broadly on the accruals basis. For further guidance, see the Accruals basis guidance note. Companies are subject to corporation tax based on taxable total profits of a chargeable accounting period, which includes the net income from property. See the Taxable Total Profits (TTP) and Long and short periods of account guidance notes.
CTA 2009, s 248 provides that amounts receivable for the use of furniture in furnished holiday lettings are also to be included as rental business receipts. See the Furnished holiday lets guidance note (subscription sensitive).
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