Income Tax (Trading and Other Income) Act 2005 section 328

Relevant UK earnings for pension purposes: UK property business

Section 328 requires a separate calculation of profits from furnished holiday lettings within a UK property business, so that those profits can count as relevant UK earnings for pension contribution purposes.

• Where a UK property business includes both furnished holiday lettings and other property income, the profits from the furnished holiday lettings part must be calculated separately.
• This separate calculation is needed because profits from qualifying furnished holiday lettings are treated as relevant UK earnings for pension purposes under section 189 of the Finance Act 2004.
• The separate treatment gives furnished holiday lettings a tax advantage not available to ordinary property income, by allowing those profits to support pension contributions.
• Where only part of a property qualifies as furnished holiday accommodation, fair and reasonable apportionments must be made to arrive at the correct figures for this section.