Income Tax (Trading and Other Income) Act 2005 section 272ZA

Application of trading income rules: cash basis

Section 272ZA identifies which trading income rules from Part 2 of the Act also apply when calculating the profits of a property business under the cash basis.

• When a property business uses the cash basis, only a specified subset of the trading income rules from Part 2 apply — not all of them
• The applicable rules cover basic profit calculations, restrictions on deductions (such as the wholly and exclusively test, employee benefits, entertainment, and crime-related payments), and rules permitting specific deductions (such as pre-trading expenses, redundancy payments, research costs, and patent expenses)
• Additional applicable rules address fixed-rate deductions for vehicles, treatment of receipts (including capital receipts, released debts, insurance recoveries, and industrial development grants), amounts not reflecting commercial transactions, and gifts to charities
• Where these borrowed trading income provisions refer to "this Part", that expression is to be read as meaning those specific provisions together with the rest of Part 3 (property income), and a specific cross-reference in section 106D to section 96A is redirected to section 307F dealing with deemed capital receipts on leaving the cash basis