Taxation of property income for companies

By Tolley
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The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Taxation of property income for companies
  • Outline
  • Corporation tax

Outline

Property income can come in many forms, primarily rent and lease premiums. The taxation of lease premiums is dealt with in the Lease premiums guidance note.

All rental income from UK property is pooled and taxed as a ‘UK property rental business’, for income tax purposes.

For corporation tax purposes, all rental income from UK property similarly is grouped and taxed together under the provisions of CTA 2009, Part 4 (previously Sch A).

Although there are various differences between the ways that UK rental income profits are treated for income tax purposes, and for corporation tax purposes, the way in which those UK rental income profits are actually calculated are the same. This is discussed further in the Accruals Basis, Revenue expenditure and Capital expenditure guidance notes.

For a company rather than looking at tax years, you consider the chargeable accounting period. A company will pay corporation tax based on profits of a chargeable accounting period, such that regardless of the category of profit / gain under consideration the use of accounting period is the same.

The definition of an accounting period can be found in CTA 2009, ss 8–9. Broadly, an accounting period begins when the company comes within the charge to corporation tax or when a prior accounting period ends.

An accounting period ends on the sooner of:

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