Post-cessation receipts and expenses of a property business

Produced by Tolley

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

  • Post-cessation receipts and expenses of a property business
  • Cessation of a property business
  • Post-cessation property receipts
  • Election to carry back post-cessation receipts
  • Post-cessation property expenses
  • Further relief for against total income
  • Set against total income for the tax year
  • Set against capital gains for the tax year
  • Targeted anti-avoidance rule
  • Cap on unlimited income tax reliefs
  • More...

Cessation of a property business

The date of cessation of a property business is a question of fact.

As a UK property business is a pool of all the taxpayer’s income-generating property in the UK, the date of cessation of a property business is usually when the final UK property is sold. So if, for example, the taxpayer owned five UK properties which were rented out, even if four of these properties were sold, the UK property business would continue until the sale of the final property. Alternatively, the property business could cease when all the properties are used for non-business purposes, for example the business consists of one property and, after the tenant leaves, the owner moves into the property.

An individual partner will permanently cease to carry on the property business when retiring from the partnership even if the remaining partners carry on the business afterwards.

For a company the cessation of the property business will also occur if the company ceases to be within the charge to corporation tax.

The date of cessation is important as it has implications for any property business losses and any post-cessation receipts and expenses. The implications of the cessation of the business for the purposes of unused property business losses is discussed in the Post-cessation receipts and expenses of a property business (income tax) and Property business losses for companies (corporation tax) guidance notes.

Post-cessation property receipts

For a UK property business, post-cessation receipts are subject to income or corporation tax. For income tax purposes, the legislation confirms that the charge is on the full amount received in the tax year.

Therefore, if any property income arises post-cessation which has not already been assessed, this will be taxed in the tax year in which it is received. Relief is available for any post-cessation expenses not already relieved that are incurred in the same tax year and would have been allowable had the property business continued.

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