Commentary

B6.202C Calculation of property business profits using cash basis

Business tax
Business tax | Commentary

B6.202C Calculation of property business profits using cash basis

Business tax | Commentary

B6.202C Calculation of property business profits using cash basis

The cash basis is the default method of calculation of profits for an unincorporated property business from 2017/18 unless any of the conditions in B6.202 apply such that the profits are calculated under GAAP (see B6.202B). Under the cash basis the receipts are brought into account at the time they are received, and expenses at the time they are paid, subject to any adjustments required by law1. Where a landlord uses a letting agent the time of receipt and expenditure by the agent should be used2. Where a landlord receives a premium for granting a lease of less than 50 years the cash basis cannot be applied to such sums. The rules on the taxation of lease premiums receipts (see B6.301) will therefore continue to operate by reference to the date a contract is entered into3. Where a landlord has paid a lease premium the rules which allow a deduction when the lease premium is taxed as income (see B6.310) do not apply and no deduction is allowed under the cash basis4.

In the main, the calculation of the profits of a property business under the cash basis follows the rules that apply for trades5, but the provisions applying are limited to the following6:

Basic rules
Losses calculated on same basis as

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