PIM4484 - Property allowance: contents: examples: computation of partial relief for two relevant property businesses

Niamh has relievable receipts from letting out her cabin in Switzerland totalling £700 with associated expenses of £100 in the tax year. She also has relievable receipts from letting out a flat in Belfast of £600 and another in York of £500 with associated expenses of £150 in the tax year.

Niamh elects to use the property allowance for partial relief. Her relevant property income for the tax year comes from two property businesses (a UK property business and an overseas property business).

Niamh computes partial relief as follows:

Step 1 – Calculate Total Receipts of the relevant property businesses:

The total receipts of her UK relevant property business is £1,100.

The total receipts of her overseas relevant property business is £700

Step 2 – Subtract the Deductible Amount from Receipts:

Niamh must then choose how to allocate the deductible amount of £1,000 to her two relevant property businesses.

Niamh chooses to deduct £700 from her overseas relevant property business. This reduces the taxable profits in her overseas property business to NIL (£700-£700 = £0).

Niamh allocates the remaining £300 of the deductible amount to her UK property business. This leaves Niamh with £800 of taxable profits in her UK property business (£1,100 - £300= £800)

The expenses of either business are not brought into account because you cannot claim both the property allowance and expenses.