Corporation Tax Act 2009 section 210

Profits of a property business: application of trading income rules

Section 210 establishes that the profits of a property business are calculated using the same approach as trading profits, but only a specified set of the trading income rules apply.

• Property business profits (both UK and overseas) are calculated in the same way as trading profits, using the same basic framework of generally accepted accounting practice, receipts, and expenses.
• Only a defined list of trading income rules from Part 3 of the Act applies to property businesses — not all trading rules carry across, as some are irrelevant to income from land (for example, rules about the herd basis for livestock).
• The applicable rules cover key areas including: basic profit calculation rules, restrictions on deductions (such as capital expenditure, the wholly and exclusively test, bad debts, and car hire), allowable deductions (such as pre-trading expenses, redundancy payments, and research costs), receipts, gifts to charities, and unremittable amounts.
• Some trading income provisions that are unlikely — but not impossible — to apply to a property business are still included in the list, to cover unusual circumstances such as a landlord funding scientific research related to land decontamination.