Start and end of a property business

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Start and end of a property business
  • Commencement
  • Cessation

For income tax purposes, rental profits from land and buildings are categorised as either:

  • a UK property business, or
  • an overseas property business, see the Overseas property businesses guidance note

England, Wales, Scotland and Northern Ireland make up the countries of the UK. The Isle of Man and the Channel Islands are treated as overseas for the purposes of the legislation.

This means that profits from UK-situs properties are pooled together and reported as one business, and profits from properties sited outside the UK are pooled together and reported as one business.

The exceptions to this are:

  • furnished holiday lettings which are calculated and reported separately, see the Furnished holiday lets guidance note
  • properties let at an uncommercial rent as the expenses are limited to the amount of the rent, see the Allowable property expenses guidance note

UK property businesses are considered further in the Property income guidance note.

This guidance note refers to a UK property business but the rules apply equally to an overseas property business.

Commencement

Before commencing a property business, thought must be given as to the choice of appropriate holding vehicle, see the Property income guidance note and Tolley’s Tax Planning 2017/18 Chapter 35.16–35.29 (subscription sensitive).

The taxpayer also needs to consider whether the venture will be a property business or a trade, see the Property investment or trading? guidance note. This guidance note only considers a venture that is considered to be a property business

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