Corporation Tax Act 2009 section 44

Surplus business accommodation

Section 44 allows a company to treat income from letting temporarily surplus business accommodation as a trading receipt rather than as property business income.

• Where a company lets part of a building that is temporarily surplus to its trade requirements, and the remaining part is still used for the trade, the rental income and letting expenses may be included in the trade profit calculation instead of as property business income.
• Accommodation qualifies as temporarily surplus only if it was used for the trade or acquired within the last 3 years, the company intends to use it for the trade again, and the letting is for a term of no more than 3 years.
• The letting receipts must be relatively small, the accommodation must not be held as trading stock, and the income and expenses would otherwise fall within a property business.
• Once a company elects to treat a letting this way, all subsequent income and expenses from that letting must continue to be dealt with as trading items for as long as the conditions remain met.