Income Tax (Trading and Other Income) Act 2005 section 320

Nature of item apportioned on sale of estate or interest in land

Section 320 ensures that when land is sold and amounts such as rent are apportioned between seller and buyer, the apportioned amount retains its original character as income rather than being treated as part of the capital sale price.

• When land is sold, receipts or outgoings (such as rent) relating to the property may be apportioned between seller and buyer at completion
• Any amount apportioned to the seller keeps its original income or capital nature for property business profit calculations
• This prevents sellers from converting what is essentially rental income into a capital receipt by adding it to the sale price
• The rule applies where the receipt or outgoing is receivable or payable by the buyer after the apportionment is made — typically after completion of the sale