This guidance note summarises when the cash basis can be used for property businesses, the treatment of common property income and expenses and the restrictions as to how property losses can be relieved. However, the legislation is complicated and, therefore, before advising clients it is advisable to consider the statutory provisions carefully in relation to the client’s circumstances. For further reading, see Simon’s Taxes B6.202C–B6.202E.

Broadly the cash basis must be used by:

1. •

   individuals, or partnerships comprising only individuals, with

2. •

   gross property income of £150,000 or less, with a UK and an overseas property business each considered in isolation. Where both spouses or civil partners are under the cash basis, the £150,000 threshold applies per spouse

For ease of reference, the alternative to the cash basis is referred to as the ‘accruals basis’ in this guidance note, although of course this means the basis under which both generally accepted accounting practice (GAAP) and standard tax provisions apply. For discussion of these rules, see the Taxation of property income for individuals