|
| |
|
(4) | No deduction is allowed if— |
| |
(a) | the person derives rent-a-room receipts from the dwelling-house, and |
| |
(b) | those receipts are brought into account in calculating the profits of the |
| |
business in accordance with section 793 or 797 (rent-a-room relief). |
| |
(5) | No deduction is allowed in respect of expenditure treated by section 57 (as |
| 5 |
applied by section 272) as incurred on the date on which the person starts to |
| |
carry on the business unless the expenditure was incurred not more than 6 |
| |
| |
| |
(1) | In relation to any deduction under section 312, the Treasury may make |
| 10 |
| |
(a) | restricting or reducing the amount of expenditure for which the |
| |
| |
(b) | excluding entitlement to the deduction in such cases as may be |
| |
specified in, or determined in accordance with, the regulations, |
| 15 |
(c) | determining who is (and is not) entitled to the deduction if different |
| |
persons have different interests in land that consists of or includes the |
| |
whole or part of a building containing one or more dwelling-houses, |
| |
(d) | making apportionments if the property business is carried on by |
| |
persons in partnership or an interest in land is beneficially owned by |
| 20 |
persons jointly or in common. |
| |
(2) | The apportionments that may be made include apportionments to companies |
| |
within the charge to corporation tax. |
| |
Deductions for expenditure on sea walls |
| |
315 | Deduction for expenditure on sea walls |
| 25 |
(1) | This section applies if in a tax year a person — |
| |
(a) | is the owner or tenant of any premises, and |
| |
(b) | incurs expenditure in making a sea wall or other embankment |
| |
necessary for the preservation or protection of the premises against the |
| |
encroachment or overflowing of the sea or any tidal river. |
| 30 |
(2) | In calculating the profits of any property business carried on by the person in |
| |
relation to the premises, a deduction is allowed for the expenditure in each tax |
| |
year in the deduction period. |
| |
(3) | The deduction period comprises— |
| |
(a) | the tax year in which the expenditure is incurred, and |
| 35 |
(b) | the next 20 tax years. |
| |
(4) | The amount of the deduction is 1/21 of the expenditure. |
| |
(5) | No deduction is allowed for any expenditure in respect of which a capital |
| |
| |
(6) | Section 316 deals with the case of an interest in the premises being transferred |
| 40 |
(and this section applies in that case as if the reference to the person in |
| |
subsection (2) above included the transferor and the transferee). |
| |
|
| |
|
| |
|
316 | Transfer of interest in premises |
| |
(1) | This section applies if, during the deduction period, the whole of the person’s |
| |
interest in the premises or in any part of them is transferred, whether by |
| |
operation of law or otherwise. |
| |
(2) | For the tax year in which the transfer takes place— |
| 5 |
(a) | the transferor and the transferee are entitled to a part of any deduction |
| |
| |
(b) | the amount of the deduction is determined by what is just and |
| |
| |
(3) | For subsequent tax years in the deduction period, the entitlement to any |
| 10 |
deduction under section 315 depends on whether the interest transferred is in |
| |
the whole of the premises or in part of them. |
| |
(4) | If the interest transferred is in the whole of the premises, the transferee (but not |
| |
the transferor) is entitled to any deduction under section 315. |
| |
(5) | If the interest transferred is in part of the premises— |
| 15 |
(a) | the transferor and the transferee are entitled to a part of any deduction |
| |
| |
(b) | the amount of the deduction is determined by reference to what is |
| |
properly referable to the part of the premises. |
| |
(6) | This section is supplemented by sections 317 (ending of lease of premises) and |
| 20 |
318 (transfer involving company within the charge to corporation tax). |
| |
317 | Ending of lease of premises |
| |
(1) | If a person’s interest in the premises is a lease that comes to an end before the |
| |
end of the deduction period, the interest is treated as if transferred to the |
| |
| 25 |
(2) | If a new lease of the premises is granted and the new tenant makes a payment |
| |
in respect of the embankment in question to the old tenant, the transferee is the |
| |
| |
(3) | Otherwise the transferee is the owner of the interest in immediate reversion on |
| |
the lease (or, in Scotland, the landlord). |
| 30 |
318 | Transfer involving company within the charge to corporation tax |
| |
(1) | This section explains how section 316 works if— |
| |
(a) | the transferor is a person within the charge to income tax and the |
| |
transferee is a company within the charge to corporation tax, or |
| |
(b) | the transferor is a company within the charge to corporation tax and the |
| 35 |
transferee is a person within the charge to income tax. |
| |
(2) | Section 316 applies only for the purpose of determining— |
| |
(a) | whether the person within the charge to income tax is entitled to a |
| |
deduction (or part of a deduction) under section 315, and |
| |
(b) | the amount of any such deduction. |
| 40 |
(3) | Accordingly, any reference to— |
| |
(a) | whether a person is entitled to a deduction (or part of a deduction) |
| |
| |
|
| |
|
| |
|
(b) | the amount of any such deduction, |
| |
| is ignored if the person is a company within the charge to corporation tax. |
| |
(4) | For any entitlement of a company within the charge to corporation tax to a |
| |
deduction for any of the expenditure, see section 30 of ICTA (corresponding |
| |
corporation tax provision). |
| 5 |
| |
319 | Relief in respect of mineral royalties |
| |
(1) | This section applies if in a tax year a person who is UK resident, or ordinarily |
| |
UK resident, carries on a UK property business the receipts of which consist of |
| |
or include mineral royalties— |
| 10 |
(a) | which the person is entitled to receive under a mineral lease or |
| |
| |
(b) | which are not chargeable to tax under Chapter 8 (rent receivable in |
| |
connection with a UK section 12(4) concern). |
| |
(2) | In calculating the profits of the business, the person is treated as— |
| 15 |
(a) | entitled to receive only half of the total of the mineral royalties arising |
| |
under the lease or agreement in the tax year, and |
| |
(b) | making in the tax year only half of the total of the payments made in |
| |
respect of the management of the property concerned. |
| |
(3) | Sections 341 to 343 (meaning of “mineral lease or agreement” and “mineral |
| 20 |
royalties”) apply for the purposes of this section as they apply for the purposes |
| |
| |
Apportionments on sale of land |
| |
320 | Nature of item apportioned on sale of estate or interest in land |
| |
(1) | This section applies if— |
| 25 |
(a) | a person sells an estate or interest in land, |
| |
(b) | on the sale a part of a receipt or outgoing in respect of the estate or |
| |
interest is apportioned to the seller, and |
| |
(c) | the receipt or outgoing is receivable or to be paid by the buyer after the |
| |
| 30 |
(2) | In calculating the profits of the seller’s property business, the part apportioned |
| |
is treated as being of the same nature as the receipt or outgoing. |
| |
| |
| |
(1) | Nothing in this Part is to be read as applying the rules relating to mutual |
| 35 |
business to property businesses. |
| |
(2) | Accordingly, receipts and expenses are to be brought into account in |
| |
calculating the profits of a person’s property business even if a relationship of |
| |
mutuality exists between that person and another. |
| |
|
| |
|
| |
|
| |
Commercial letting of furnished holiday accommodation |
| |
| |
| |
(1) | This Chapter explains for the purposes of this Part what is meant by the |
| 5 |
commercial letting of furnished holiday accommodation (see sections 323 to |
| |
| |
(2) | It matters whether a UK property business consists of or includes the |
| |
commercial letting of furnished holiday accommodation for the purposes of— |
| |
(a) | section 312 (deduction for expenditure on energy-saving items: see |
| 10 |
| |
(b) | Chapter 1 of Part 10 of ICTA (loss relief: see section 504A of that Act), |
| |
(c) | section 833(4)(c) of ICTA (income regarded as earned income: see |
| |
section 504A of that Act), |
| |
(d) | certain provisions of TCGA 1992 (see section 241 of that Act), |
| 15 |
(e) | CAA 2001 (see, for example, sections 248 and 249 of that Act), and |
| |
(f) | section 189(2)(b) of FA 2004 (income regarded as relevant UK earnings |
| |
for pension purposes: see section 504A of that Act). |
| |
(3) | This Chapter also supplements the above provisions by providing in certain |
| |
circumstances for the profits of the furnished holiday lettings part of a UK |
| 20 |
property business to be calculated separately (see sections 327 and 328). |
| |
| |
323 | Meaning of “commercial letting of furnished holiday accommodation” |
| |
(1) | A letting is a lease or other arrangement under which a person is entitled to the |
| |
| 25 |
(2) | A letting of accommodation is commercial if the accommodation is let— |
| |
(a) | on a commercial basis, and |
| |
(b) | with a view to the realisation of profits. |
| |
(3) | A letting is of furnished holiday accommodation if— |
| |
(a) | the person entitled to the use of the accommodation is also entitled, in |
| 30 |
connection with that use, to the use of furniture, and |
| |
(b) | the accommodation is qualifying holiday accommodation (see sections |
| |
| |
(4) | This section applies for the purposes of this Chapter. |
| |
324 | Meaning of “relevant period” in sections 325 and 326 |
| 35 |
(1) | For the purposes of sections 325 and 326 “the relevant period” for |
| |
accommodation let by a person in a tax year is determined as follows. |
| |
(2) | If the accommodation was not let by the person as furnished accommodation |
| |
in the previous tax year, “the relevant period” is 12 months beginning with the |
| |
|
| |
|
| |
|
first day in the tax year on which it is let by the person as furnished |
| |
| |
(3) | If the accommodation— |
| |
(a) | was let by the person as furnished accommodation in the previous tax |
| |
| 5 |
(b) | is not let by the person as furnished accommodation in the following |
| |
| |
| “the relevant period” is 12 months ending with the last day in the tax year on |
| |
which it is let by the person as furnished accommodation. |
| |
(4) | Otherwise “the relevant period” is the tax year. |
| 10 |
325 | Meaning of “qualifying holiday accommodation” |
| |
(1) | Accommodation which is let by a person during a tax year is “qualifying |
| |
holiday accommodation” for the tax year if the availability, letting and pattern |
| |
of occupation conditions are met. |
| |
(2) | The availability condition is that, during the relevant period, the |
| 15 |
accommodation is available for commercial letting as holiday accommodation |
| |
to the public generally for at least 140 days. |
| |
(3) | The letting condition is that, during the relevant period, the accommodation is |
| |
commercially let as holiday accommodation to members of the public for at |
| |
| 20 |
(4) | For the purposes of the letting condition, a letting of accommodation for a |
| |
period of longer-term occupation (see subsection (6)) is not a letting of it as |
| |
| |
(5) | The pattern of occupation condition is that, during the relevant period, not |
| |
more than 155 days fall during periods of longer-term occupation. |
| 25 |
(6) | For the purposes of this section a “period of longer-term occupation” is a |
| |
continuous period of more than 31 days during which the accommodation is |
| |
in the same occupation otherwise than because of circumstances that are not |
| |
| |
326 | Under-used holiday accommodation: averaging elections |
| 30 |
(1) | This section applies if during a tax year a person lets both— |
| |
(a) | qualifying holiday accommodation, and |
| |
(b) | accommodation that would be qualifying holiday accommodation if |
| |
the letting condition (see section 325(3)) were met in relation to it |
| |
(“under-used accommodation”). |
| 35 |
(2) | The person may make an election for the tax year specifying— |
| |
(a) | the qualifying holiday accommodation, and |
| |
(b) | any or all of the under-used accommodation. |
| |
(3) | The under-used accommodation so specified is treated as qualifying holiday |
| |
accommodation for the tax year if the average of the number of let days for the |
| 40 |
tax year of all the accommodation specified in the election is at least 70. |
| |
|
| |
|
| |
|
(4) | “The number of let days” for a tax year of any accommodation is the number |
| |
of days during the relevant period for which it is commercially let by the |
| |
person as holiday accommodation to members of the public. |
| |
(5) | Qualifying holiday accommodation may not be specified in more than one |
| |
| 5 |
(6) | An election for a tax year must be made on or before the first anniversary of the |
| |
normal self-assessment filing date for the tax year. |
| |
Separate profit calculations |
| |
327 | Capital allowances and loss relief |
| |
(1) | If a UK property business consists of both— |
| 10 |
(a) | the commercial letting of furnished holiday accommodation (“the |
| |
furnished holiday lettings part”), and |
| |
(b) | other businesses or transactions (“the other part”), |
| |
| this section requires separate calculations to be made of the profits of the |
| |
furnished holiday lettings part and the other part. |
| 15 |
(2) | The calculations must be made if— |
| |
(a) | section 248 or 249 of CAA 2001 (giving effect to allowances and |
| |
charges) applies to the furnished holiday lettings part or the other part, |
| |
| |
(b) | any provision of Chapter 1 of Part 10 of ICTA (loss relief) applies in |
| 20 |
relation to a loss made in either of those parts. |
| |
(3) | If there is a letting of accommodation only part of which is holiday |
| |
accommodation, such apportionments are to be made for the purposes of this |
| |
section as are just and reasonable. |
| |
328 | Earned income and relevant UK earnings for pension purposes |
| 25 |
(1) | If a UK property business consists of both— |
| |
(a) | the commercial letting of furnished holiday accommodation (“the |
| |
furnished holiday lettings part”), and |
| |
(b) | other businesses or transactions, |
| |
| this section requires a separate calculation to be made of the profits of the |
| 30 |
furnished holiday lettings part. |
| |
(2) | The calculation must be made if the profits of the furnished holiday lettings |
| |
| |
(a) | earned income under section 833(4)(c) of ICTA, or |
| |
(b) | income regarded as relevant UK earnings for pension purposes under |
| 35 |
section 189(2)(b) of FA 2004. |
| |
(3) | If there is a letting of accommodation only part of which is holiday |
| |
accommodation, such apportionments are to be made for the purposes of this |
| |
section as are just and reasonable. |
| |
|
| |
|
| |
|
| |
| |
Adjustment on change of basis |
| |
329 | Application of Chapter |
| |
(1) | This Chapter applies if— |
| 5 |
(a) | a person carrying on a UK property business changes, from one period |
| |
of account to the next, the basis on which profits of the business are |
| |
calculated for income tax purposes, |
| |
(b) | the old basis accorded with the law or practice applicable in relation to |
| |
the period of account before the change, and |
| 10 |
(c) | the new basis accords with the law and practice applicable in relation |
| |
to the period of account after the change. |
| |
(2) | The practice applicable in any case means the accepted practice in cases of that |
| |
description as to how profits of a UK property business should be calculated |
| |
| 15 |
(3) | Subsections (3) to (6) of section 227 (what is meant by a person changing the |
| |
basis on which profits are calculated) apply for the purposes of this section as |
| |
they apply for the purposes of that section (but as if any reference to a trade |
| |
were to a UK property business). |
| |
330 | Adjustment income and adjustment expense |
| 20 |
(1) | An amount by way of adjustment must be calculated in accordance with |
| |
section 231, which applies in relation to a UK property business as it applies in |
| |
| |
(2) | If the amount produced by the calculation is positive, it is treated as income |
| |
and charged to income tax under this Chapter. |
| 25 |
| It is referred to in this Chapter as “adjustment income”. |
| |
(3) | If the amount produced by the calculation is negative, a deduction is allowed |
| |
for it in calculating the profits of the business. |
| |
| It is referred to in this Chapter as an “adjustment expense”. |
| |
(4) | This section is subject to section 234 (no adjustment for certain expenses |
| 30 |
previously brought into account), which applies in relation to a UK property |
| |
business as it applies in relation to a trade. |
| |
| |
Tax is charged under this Chapter on the full amount of any adjustment |
| |
income arising in the tax year. |
| 35 |
| |
The person liable for any tax charged under this Chapter is the person |
| |
receiving or entitled to the adjustment income. |
| |
|
| |
|