BIM00570 - Using this manual in computing property income

S272 Income Tax (Trading and Other Income) Act 2005, S210 Corporation Tax Act 2009

Because the profits of a property business are calculated, for the purposes of Income Tax and Corporation Tax, in the same way as the profits of a trade, most of the guidance in the Business Income Manual applies to both trades and property businesses.

There are, however, some areas where the computation of property income is different to that for a trade:

• for Income Tax, trade basis periods are not used (but see PIM1040 for partnerships);
• there are separate rules on loss relief;
• there are separate rules on lease premium relief;
• for Corporation Tax, property business profits are calculated excluding items dealt with under the loan relationship and derivative contracts rules;
• there are some statutory rules which apply only to property business profits, and these are covered in the Property Income Manual.

For avoidance of doubt the following sections of the Business Income Manual are relevant to property businesses:

Issue	Page reference
Distribution of assets of mutual concerns	BIM24550 onwards
Generally accepted accounting practice	BIM31000 onwards
Losses calculated on same basis as profits	BIM30500 onwards
Receipts and expenses	BIM30500 onwards
Change of accounting basis	BIM34000 onwards
Capital expenditure	BIM35000 onwards
Industrial development grants	BIM40465
Sums recovered under insurance policies etc	BIM40750 onwards
Bad and doubtful debts	BIM42700 onwards
Crime-related payments	BIM43100 onwards
Employee benefit contributions	BIM44500 onwards
Business entertainment and gifts	BIM45000 onwards
Payroll deduction schemes: contributions to agents' expenses	BIM45195
Payments to Export Credits Guarantee Department	BIM45580
Interest (Income Tax payers)	BIM45650 onwards
Exclusion of double relief for interest	BIM45765
Incidental costs of obtaining finance	BIM45800 onwards
Expenses connected with patents, designs and trade marks	BIM45950 onwards
Pre-trading expenses	BIM46350 onwards
Replacement and alteration of trade tools	BIM46960
Payments for restrictive undertakings	BIM47005
Counselling and retraining expenses	BIM47217
Relief for the cost of training employees	BIM47080
Penalties, interest and VAT surcharges	BIM47090
Seconded employees	BIM47115 - BIM47120
Unpaid remuneration	BIM47130 onwards
Redundancy payments etc	BIM47200 onwards
Expenses in connection with security	BIM47300 onwards
Contributions to local enterprise organisations or urban regeneration companies	BIM47610
Car or motor cycle hire	BIM47700 onwards
Cessation, treatment on a complete change of partners	BIM82200 onwards
Post-cessation receipts and expenses	BIM90000 onwards