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Corporation Tax Bill


Corporation Tax Bill
Part 4 — Property income
Chapter 6 — Commercial letting of furnished holiday accommodation

120

 

Definition

265     

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

use of accommodation.

(2)   

A letting of accommodation is commercial if the accommodation is let—

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(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

connection with that use, to the use of furniture, and

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(b)   

the accommodation is qualifying holiday accommodation (see sections

267 and 268).

(4)   

This section applies for the purposes of this Chapter.

266     

Meaning of “relevant period” in sections 267 and 268

(1)   

For the purposes of sections 267 and 268 “the relevant period” for

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accommodation let by a company in an accounting period is determined as

follows.

(2)   

If the accommodation was not let by the company as furnished

accommodation in the 12 months immediately before the accounting period,

“the relevant period” is 12 months beginning with the first day in the

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accounting period on which it is let by the company as furnished

accommodation.

(3)   

If the accommodation—

(a)   

was let by the company as furnished accommodation in the 12 months

immediately before the accounting period, but

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(b)   

is not let by the company as furnished accommodation in the 12 months

immediately after the accounting period,

   

“the relevant period” is 12 months ending with the last day in the accounting

period on which it is let by the company as furnished accommodation.

(4)   

Otherwise “the relevant period” is the period of 12 months ending with the last

30

day of the accounting period.

267     

Meaning of “qualifying holiday accommodation”

(1)   

Accommodation which is let by a company during an accounting period is

“qualifying holiday accommodation” for the accounting period if the

availability, letting and pattern of occupation conditions are met.

35

(2)   

The availability condition is that, during the relevant period, the

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

40

least 70 days.

 
 

Corporation Tax Bill
Part 4 — Property income
Chapter 6 — Commercial letting of furnished holiday accommodation

121

 

(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

holiday accommodation.

(5)   

The pattern of occupation condition is that, during the relevant period, not

more than 155 days fall during periods of longer-term occupation.

5

(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

normal.

268     

Under-used holiday accommodation: averaging elections

10

(1)   

This section applies if during an accounting period a company lets both—

(a)   

qualifying holiday accommodation, and

(b)   

accommodation that would be qualifying holiday accommodation if

the letting condition (see section 267(3)) were met in relation to it

(“under-used accommodation”).

15

(2)   

The company may make an election for the accounting period 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 accounting period if the average of the number of let

20

days for the accounting period of all the accommodation specified in the

election is at least 70.

(4)   

“The number of let days” for an accounting period of any accommodation is

the number of days during the relevant period for which it is commercially let

by the company as holiday accommodation to members of the public.

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(5)   

Qualifying holiday accommodation may not be specified in more than one

election for an accounting period.

(6)   

An election for an accounting period must be made within the period of two

years beginning at the end of the accounting period.

Separate profit calculations

30

269     

Capital allowances and loss relief

(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 (“the other part”),

35

   

this section requires separate calculations to be made of the profits of the

furnished holiday lettings part and the other part.

(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,

40

or

 
 

Corporation Tax Bill
Part 4 — Property income
Chapter 7 — Rent receivable in connection with a UK section 39(4) concern

122

 

(b)   

any provision of Chapter 2 of Part 10 of ICTA (loss relief) applies in

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.

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Chapter 7

Rent receivable in connection with a UK section 39(4) concern

Charge to tax on rent receivable in connection with a UK section 39(4) concern

270     

Charge to tax on rent receivable in connection with a UK section 39(4) concern

The charge to corporation tax on income applies to rent receivable in

10

connection with a UK section 39(4) concern.

271     

Meaning of “rent receivable in connection with a UK section 39(4) concern”

(1)   

For the purposes of this Chapter rent is receivable in connection with a UK

section 39(4) concern if—

(a)   

it is receivable in respect of an estate, interest or right in or over land in

15

the United Kingdom, and

(b)   

the estate, interest or right is used, occupied or enjoyed in connection

with a concern listed in section 39(4).

(2)   

For the purposes of this Chapter rent is also receivable in connection with a UK

section 39(4) concern if—

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(a)   

it is receivable in respect of an estate, interest or right in or over land in

the United Kingdom,

(b)   

the lease or other agreement under which it is receivable provides for

its recoupment by reducing royalties or payments of a similar nature,

and

25

(c)   

the reduction applies if the estate, interest or right is used, occupied or

enjoyed in connection with a concern listed in section 39(4).

(3)   

In this Chapter “rent” includes—

(a)   

a receipt mentioned in section 207(3), and

(b)   

any other receipt in the nature of rent.

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Management expenses of owner of mineral rights

272     

Deduction for management expenses of owner of mineral rights

(1)   

This section applies if in an accounting period—

(a)   

a company lets a right to work minerals in the United Kingdom, and

(b)   

the company pays a sum wholly and exclusively as an expense of

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management or supervision of the minerals in the accounting period.

(2)   

In calculating the amount of rent receivable in connection with a UK section

39(4) concern, a deduction is allowed for the sum for the accounting period.

 
 

Corporation Tax Bill
Part 4 — Property income
Chapter 7 — Rent receivable in connection with a UK section 39(4) concern

123

 

(3)   

This is subject to section 273 (relief in respect of mineral royalties).

Mineral royalties

273     

Relief in respect of mineral royalties

(1)   

This section applies if in an accounting period—

(a)   

a UK resident company is entitled to receive mineral royalties under a

5

mineral lease or agreement, and

(b)   

the royalties are chargeable to tax under this Chapter.

(2)   

In calculating the amount of the royalties so chargeable, the company is treated

as—

(a)   

entitled to receive only half of the total of the royalties arising under the

10

lease or agreement in the accounting period, and

(b)   

paying in the accounting period only half of the total of the expenses

mentioned in section 272(1)(b) (deduction for management expenses of

owner of mineral rights).

(3)   

As to the meaning of “mineral lease or agreement” and “mineral royalties”, see

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sections 274 to 276.

(4)   

See also section 201 of TCGA 1992 (gains treated as accruing to a company

entitled to receive mineral royalties).

274     

Meaning of “mineral lease or agreement” and “mineral royalties”

(1)   

In this Chapter “mineral lease or agreement” means—

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(a)   

a lease, profit à prendre, licence or other agreement conferring a right

to win and work minerals in the United Kingdom,

(b)   

a contract for the sale, or a conveyance, of minerals in or under land in

the United Kingdom, and

(c)   

a grant of a right under section 1 of the Mines (Working Facilities and

25

Support) Act 1966 (c. 4) other than an ancillary right (within the

meaning of that Act).

(2)   

In this Chapter “mineral royalties” means so much of any rent receivable under

a mineral lease or agreement as relates to the winning and working of minerals.

(3)   

For the purposes of this section and section 276 “minerals” means all minerals

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and substances in or under land which are ordinarily worked for removal—

(a)   

by underground working, or

(b)   

by surface working,

   

but excluding water, peat, top-soil and vegetation.

275     

Extended meaning of “mineral royalties” etc in Northern Ireland

35

(1)   

In the application of this Chapter to Northern Ireland references to mineral

royalties include the following periodical payments.

(2)   

The payments are—

(a)   

payments of compensation under section 29 or 35 of the Mineral

Development Act (Northern Ireland) 1969 (c. 35 (N.I.)) (“the 1969 Act”),

40

 
 

Corporation Tax Bill
Part 4 — Property income
Chapter 8 — Rent receivable for UK electric-line wayleaves

124

 

(b)   

payments of compensation under section 4 of the Petroleum

(Production) Act (Northern Ireland) 1964 (c. 28 (N.I.)) (“the 1964 Act”),

(c)   

payments made as mentioned in section 37 of the 1969 Act,

(d)   

payments made under section 55(4)(b) of the 1969 Act, and

(e)   

payments made under section 11 of the 1964 Act (payments in respect

5

of minerals to persons entitled to a share of royalties under section 13(3)

of the Irish Land Act 1903 (c. 37)).

(3)   

In the application of this Chapter to Northern Ireland references to the mineral

lease or agreement under which mineral royalties are receivable include the

enactment under which those payments are made.

10

276     

Power to determine what counts as “mineral royalties”

The Commissioners for Her Majesty’s Revenue and Customs may by

regulations—

(a)   

provide whether, and to what extent, rents receivable under a mineral

lease or agreement which relate both to the winning and working of

15

minerals and to other matters are treated as mineral royalties, and

(b)   

provide for treating the whole of such rents as mineral royalties if the

extent to which they relate to matters other than the winning and

working of minerals is small.

Chapter 8

20

Rent receivable for UK electric-line wayleaves

Charge to tax on rent receivable for UK electric-line wayleaves

277     

Charge to tax on rent receivable for a UK electric-line wayleave

The charge to corporation tax on income applies to rent receivable for a UK

electric-line wayleave.

25

278     

Meaning of “rent receivable for a UK electric-line wayleave”

(1)   

For the purposes of this Chapter rent is receivable for a UK electric-line

wayleave if—

(a)   

it is receivable in respect of an easement, servitude or right in or over

land in the United Kingdom, and

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(b)   

the easement, servitude or right is enjoyed in connection with an

electric, telegraph or telephone wire or cable.

(2)   

The reference to the enjoyment of an easement, servitude or right in connection

with an electric, telegraph or telephone wire or cable includes (in particular) its

enjoyment in connection with—

35

(a)   

a pole or pylon supporting such a wire or cable, or

(b)   

apparatus used in connection with such a wire or cable.

(3)   

In this Chapter “rent” includes—

(a)   

a receipt mentioned in section 207(3), and

(b)   

any other receipt in the nature of rent.

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