|
| |
|
267 | Activities not for generating income from land |
| |
For the purposes of this Chapter the following activities are not carried on for |
| |
generating income from land— |
| |
(a) | farming or market gardening in the United Kingdom (but see section 9 |
| |
(UK farming or market gardening treated as trade)), |
| 5 |
(b) | any other occupation of land (but see section 10 (certain commercial |
| |
occupation of UK land treated as trade)), and |
| |
(c) | activities for the purposes of a concern to which section 12 applies |
| |
(profits of mines, quarries etc.). |
| |
| 10 |
Profits of property businesses: basic rules |
| |
Charge to tax on profits of a property business |
| |
268 | Charge to tax on profits of a property business |
| |
Income tax is charged on the profits of a property business. |
| |
269 | Territorial scope of charge to tax |
| 15 |
(1) | Profits of a UK property business are chargeable to tax under this Chapter |
| |
whether the business is carried on by a UK resident or a non-UK resident. |
| |
(2) | Profits of an overseas property business are chargeable to tax under this |
| |
Chapter only if the business is carried on by a UK resident. |
| |
(3) | But, in the case of an overseas property business carried on by a UK resident to |
| 20 |
whom the remittance basis applies, the only profits of the business chargeable |
| |
to tax under this Chapter are those in respect of land in the Republic of Ireland. |
| |
(4) | For a UK resident to whom the remittance basis applies, see also Chapter 11 |
| |
(charge to tax on overseas property income other than income arising in |
| |
| 25 |
| |
(1) | Tax is charged under this Chapter on the full amount of the profits arising in |
| |
| |
(2) | Subsection (1) is subject to Part 8 (foreign income: special rules). |
| |
| 30 |
The person liable for any tax charged under this Chapter is the person |
| |
receiving or entitled to the profits. |
| |
|
| |
|
| |
|
| | | | | | | payroll deduction schemes: contributions |
| | | | | | | | | | counselling and retraining expenses |
| | | | | | | 5 | | | personal security expenses |
| | | | | contributions to local enterprise |
| | | | | organisations or urban regeneration |
| | | | | | | | | | | | 10 | | | expenses connected with patents, designs |
| | | | | | | | | | payments to Export Credits Guarantee |
| | | | | | | | | | | 15 | | | | | | | | debts incurred and later released |
| | | | | distribution of assets of mutual concerns |
| | | | | industrial development grants |
| | | | | sums recovered under insurance policies |
| | 20 | | | | | | | In Chapter 7 (gifts to charities etc.)— |
| | | | | receipt by donor or connected person of |
| | | | | benefit attributable to certain gifts |
| | | | In Chapter 11 (other specific trades)— |
| | 25 | | | levies and repayments under FISMA 2000 |
| | | | In Chapter 13 (deductions from profits)— |
| | | | | | | |
|
|
(3) | In those provisions the expression “this Part” is to be read as a reference to |
| |
those provisions as applied by subsection (2) and to the other provisions of Part |
| 30 |
| |
273 | Amounts not brought into account as part of a property business |
| |
(1) | The rules for calculating the profits of a property business need to be read with |
| |
the following provisions of Part 2 (trading income)— |
| |
(a) | section 19 (tied premises), |
| 35 |
(b) | section 20 (caravan sites where trade carried on), |
| |
|
| |
|
| |
|
(c) | section 21 (surplus business accommodation), and |
| |
(d) | section 22(3) (payments for wayleaves). |
| |
(2) | Those provisions secure that amounts which would otherwise be brought into |
| |
account in calculating the profits of the business are, or may be, brought into |
| |
account instead in calculating the profits of a trade. |
| 5 |
274 | Relationship between rules prohibiting and allowing deductions |
| |
(1) | Any relevant permissive rule in this Part— |
| |
(a) | has priority over any relevant prohibitive rule in this Part, but |
| |
(b) | is subject to sections 48 (car or motor cycle hire) and 55 (crime-related |
| |
payments), as applied by section 272. |
| 10 |
(2) | In this section “any relevant permissive rule in this Part” means any provision |
| |
of this Part (apart from sections 291 to 294) which allows a deduction in |
| |
calculating the profits of a property business. |
| |
(3) | In this section “any relevant prohibitive rule in this Part”, in relation to any |
| |
deduction, means any provision of this Part (apart from sections 48 and 55, as |
| 15 |
applied by section 272) which might otherwise be read as— |
| |
(a) | prohibiting the deduction, or |
| |
(b) | restricting the amount of the deduction. |
| |
(4) | In this section any reference to any provision of this Part includes any |
| |
provision applied by section 272. |
| 20 |
| |
275 | Apportionment etc. of profits to tax year |
| |
(1) | This section applies if a period of account of a property business does not |
| |
coincide with a tax year. |
| |
(2) | Any of the following steps may be taken if they are necessary in order to arrive |
| 25 |
at the profits or losses of the tax year— |
| |
(a) | apportioning the profits or losses of a period of account to the parts of |
| |
that period falling in different tax years, and |
| |
(b) | adding the profits or losses of a period of account (or part of a period) |
| |
to profits or losses of other periods of account (or parts). |
| 30 |
(3) | The steps must be taken by reference to the number of days in the periods |
| |
| |
(4) | But the person carrying on the business may use a different way of measuring |
| |
the length of the periods concerned if— |
| |
(a) | it is reasonable to do so, and |
| 35 |
(b) | the way of measuring the length of periods is used consistently for the |
| |
purposes of the business. |
| |
|
| |
|
| |
|
| |
Profits of property businesses: lease premiums etc. |
| |
| |
| |
(1) | This Chapter provides for certain amounts (which would otherwise generally |
| 5 |
be amounts of a capital nature) to be brought into account as receipts in |
| |
calculating the profits of a property business. |
| |
(2) | The amounts relate to short-term leases in the case of— |
| |
section 277 (lease premiums), |
| |
section 278 (amount treated as lease premium where work required), |
| 10 |
section 280 (sums payable for surrender of lease), and |
| |
section 282 (assignments for profit of lease granted at undervalue). |
| |
(3) | The amounts relate to any lease in the case of— |
| |
section 279 (sums payable instead of rent), and |
| |
section 281 (sums payable for variation or waiver of term of lease). |
| 15 |
(4) | The amounts relate to the sale of any estate or interest in land in the case of— |
| |
section 284 (sales with right to reconveyance), and |
| |
section 285 (sale and leaseback transactions). |
| |
(5) | This Chapter also permits certain deductions in calculating the profits of |
| |
property businesses carried on by tenants under certain leases (see sections 291 |
| 20 |
| |
(6) | In this Chapter “short-term lease” means a lease whose effective duration is 50 |
| |
| |
Amounts treated as receipts: leases |
| |
| 25 |
(1) | This section applies if a premium is required to be paid— |
| |
(a) | under a short-term lease, or |
| |
(b) | otherwise under the terms subject to which a short-term lease is |
| |
| |
(2) | The person to whom the premium is due is treated as— |
| 30 |
(a) | entering into a transaction mentioned in section 264 (if the land to |
| |
which the lease relates is in the United Kingdom) or section 265 (if that |
| |
land is outside the United Kingdom), and |
| |
(b) | receiving the amount calculated under subsections (4) and (5) as a |
| |
result of that transaction. |
| 35 |
(3) | That amount is brought into account as a receipt in calculating the profits of the |
| |
property business which consists of or includes that transaction for the tax year |
| |
in which the lease is granted. |
| |
|
| |
|
| |
|
(4) | The amount of the receipt is given by the formula—![equation: cross[char[P],id[over[plus[num[50.0000000000000000,"50"],minus[char[Y]]],num[50.0000000000000000,
"50"]]]]](missing.gif) |
| |
| |
| |
Y is the number of complete periods of 12 months (other than the first) |
| |
comprised in the effective duration of the lease. |
| 5 |
(5) | But, if the rule in section 288 (the additional calculation rule) applies, the |
| |
amount given by the formula in subsection (4) is reduced by the amount |
| |
calculated in accordance with section 288. |
| |
278 | Amount treated as lease premium where work required |
| |
(1) | This section applies if the terms subject to which a lease is granted impose on |
| 10 |
the tenant an obligation to carry out work on the premises. |
| |
(2) | The lease is treated for the purposes of section 277 (lease premiums) as |
| |
requiring the payment of a premium to the landlord (in addition to any other |
| |
| |
(3) | The amount of the premium is the amount by which the value of the landlord’s |
| 15 |
estate or interest immediately after the commencement of the lease exceeds |
| |
what its value would have been at that time if the terms of the lease did not |
| |
impose the obligation on the tenant. |
| |
(4) | An obligation, or part of an obligation, that requires the carrying out of |
| |
excepted work is ignored for the purposes of this section. |
| 20 |
(5) | Work is “excepted work” if the payment for carrying it out would, if the |
| |
landlord and not the tenant were obliged to carry it out, be deductible as an |
| |
expense in calculating the profits of the landlord’s property business. |
| |
279 | Sums payable instead of rent |
| |
(1) | This section applies if— |
| 25 |
(a) | under the terms subject to which a lease is granted a sum becomes |
| |
payable by the tenant instead of the whole or a part of the rent for a |
| |
| |
(b) | the period is 50 years or less. |
| |
(2) | The person to whom the sum is due is treated as— |
| 30 |
(a) | entering into a transaction mentioned in section 264 (if the land to |
| |
which the lease relates is in the United Kingdom) or section 265 (if that |
| |
land is outside the United Kingdom), and |
| |
(b) | receiving the amount calculated under subsections (4) and (5) as a |
| |
result of that transaction. |
| 35 |
(3) | That amount is brought into account as a receipt in calculating the profits of the |
| |
property business which consists or of includes that transaction for the tax year |
| |
in which the sum becomes payable. |
| |
|
| |
|
| |
|
(4) | The amount of the receipt is given by the formula—![equation: cross[char[S],id[over[plus[num[50.0000000000000000,"50"],minus[char[Y]]],num[50.0000000000000000,
"50"]]]]](missing.gif) |
| |
| |
S is the sum payable instead of rent, and |
| |
Y is the number of complete periods of 12 months (other than the first) |
| |
comprised in the period in relation to which the sum is payable. |
| 5 |
(5) | But, if the rule in section 288 (the additional calculation rule) applies, the |
| |
amount given by the formula in subsection (4) is reduced by the amount |
| |
calculated in accordance with section 288. |
| |
(6) | In determining for the purposes of this Chapter the duration of the period in |
| |
relation to which the sum is payable, any part of the period that falls after the |
| 10 |
expiry of the effective duration of the lease is excluded. |
| |
280 | Sums payable for surrender of lease |
| |
(1) | This section applies if, under the terms subject to which a short-term lease is |
| |
granted, a sum becomes payable by the tenant as consideration for the |
| |
| 15 |
(2) | The person to whom the sum is due is treated as— |
| |
(a) | entering into a transaction mentioned in section 264 (if the land to |
| |
which the lease relates is in the United Kingdom) or section 265 (if that |
| |
land is outside the United Kingdom), and |
| |
(b) | receiving the amount calculated under subsections (4) and (5) as a |
| 20 |
result of that transaction. |
| |
(3) | That amount is brought into account as a receipt in calculating the profits of the |
| |
property business which consists of or includes that transaction for the tax year |
| |
in which the sum becomes payable. |
| |
(4) | The amount of the receipt is given by the formula—![equation: cross[char[S],id[over[plus[num[50.0000000000000000,"50"],minus[char[Y]]],num[50.0000000000000000,
"50"]]]]](missing.gif) |
| 25 |
| |
S is the sum payable as consideration for the surrender of the lease, and |
| |
Y is the number of complete periods of 12 months (other than the first) |
| |
comprised in the effective duration of the lease. |
| |
(5) | But, if the rule in section 288 (the additional calculation rule) applies, the |
| 30 |
amount given by the formula in subsection (4) is reduced by the amount |
| |
calculated in accordance with section 288. |
| |
281 | Sums payable for variation or waiver of term of lease |
| |
(1) | This section applies if— |
| |
(a) | a sum becomes payable by the tenant (otherwise than by way of rent) |
| 35 |
as consideration for the variation or waiver of a term of a lease, |
| |
|
| |
|