B2.465 Rent and similar payments for the use of land
Rent and other payments made to use premises to carry on the trade are usually deductible in computing trading profits1.. This might include rent paid by a trader to the landlord for the use of business premises, business rates, council tax and buildings insurance.
Rent for property with more than one use
In calculating the profits of a trade, if an expense is incurred for more than one purpose, a deduction may be made for any identifiable proportion which is incurred wholly and exclusively for the purposes of the trade3. However, if accommodation costs have a dual purpose, where it is not possible to separate out business and non-business use, it is likely that the whole of the cost will be disallowed.
For example, in Healy4, the taxpayer was an actor who lived in Cheshire but had performed in a musical in London. It was necessary to consider whether the actor's sole purpose for renting the flat had been to carry on his profession. so that it was necessary to establish, on a subjective basis, what had been in his mind when he had entered the tenancy agreement. It was found that the actor had a dual purpose when taking the flat. One purpose had been a business purpose and the other had been that of having accommodation in which he could receive visitors. The 'wholly and exclusively' test5 was therefore not satisfied, and a deduction was not allowed.
Where a lease
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