Corporation Tax Act 2009

Chapter 3 U.K. Profits of property businesses: basic rules

Charge to tax on profits of a property business U.K.

209 Charge to tax on profits of a property business U.K.

The charge to corporation tax on income applies to the profits of a property business.

Modifications etc. (not altering text)

C1 S. 209 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 86(1) (with s. 147, Sch. 17)

Calculation of profits U.K.

210 Profits of a property business: application of trading income rules U.K.

(1) The profits of a property business are calculated in the same way as the profits of a trade.

(2) But the provisions of Part 3 (trading income) which apply as a result of subsection (1) are limited to the following—

In Chapter 3 (basic rules)—
section 46	generally accepted accounting practice
section 47	losses calculated on same basis as profits
section 48	receipts and expenses
[F1 section 49A	money's worth]
section 52	apportionment etc of profits and losses to accounting period
In Chapter 4 (rules restricting deductions)—
section 53	capital expenditure
section 54	expenses not wholly and exclusively for trade and unconnected losses
section 55	bad debts
sections 56 to [F2 58B]	car F3 ... hire
section 59	patent royalties
In Chapter 5 (rules allowing deductions)—
section 61	pre-trading expenses
F4 . . .	F4 . . .
section 69	payments for restrictive undertakings
sections 70 and 71	seconded employees
section 72	payroll deduction schemes: contributions to agents' expenses
sections 73 to 75	counselling and retraining expenses
sections 76 to 81	redundancy payments etc
sections 82 to 86	contributions to local enterprise organisations or urban regeneration companies
[F5 sections 86A and 86B	contributions to flood and coastal erosion risk management projects]
sections 87 and 88	scientific research
sections 89 and 90	expenses connected with patents, designs and trade marks
section 91	payments to Export Credits Guarantee Department
section 92	levies under FISMA 2000
[F6 section 92A	deductions in relation to salaried members of limited liability partnerships]
In Chapter 6 (receipts)—
section 93	capital receipts
section 94	debts incurred and later released
section 101	distribution of assets of mutual concerns
section 102	industrial development grants
section 103	sums recovered under insurance policies etc
section 104	repayments under FISMA 2000
In Chapter 7 (gifts to charities etc)—
section 108	receipt of benefits by donor or connected person
In Chapter 9 (other specific trades)—
section 131	incidental costs of issuing qualifying shares (building societies)
section 133	annual payments paid by a credit union
In Chapter 12 (deductions from profits)—
sections 172 to 175	unremittable amounts

Textual Amendments

F1 Words in s. 210(2) table inserted (with effect in accordance with s. 71(7) of the amending Act) by Finance Act 2016 (c. 24), s. 71(6)

F2 Figure in s. 210(2) substituted (with effect in accordance with Sch. 11 paras. 65-67 of the commencing Act) by Finance Act 2009 (c. 10), Sch. 11 para. 52(a)

F3 Words in s. 210(2) omitted (with effect in accordance with Sch. 11 paras. 65-67 of the commencing Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 52(b)

F4 Words in s. 210(2) table omitted (with effect in accordance with s. 72(4)(5) of the amending Act) by virtue of Finance Act 2016 (c. 24), s. 72(3)

F5 Words in s. 210(2) table inserted (with effect in accordance with Sch. 5 para. 9 of the amending Act) by Finance Act 2015 (c. 11), Sch. 5 para. 4

F6 Words in s. 210(2) table inserted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 17 paras. 4(3), 6

211 Loan relationships and derivative contracts U.K.

(1) The profits of a property business are calculated without regard to items giving rise to—

(a) credits or debits within Part 5 (loan relationships), or

(b) credits or debits within Part 7 (derivative contracts).

(2) This section does not affect the width of the provision made by—

(a) section 464 (priority of Part 5 for corporation tax purposes), or

(b) section 699 (priority of Part 7 for corporation tax purposes).

Modifications etc. (not altering text)

C2 S. 211(1) restricted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 599(3), 1184(1) (with Sch. 2)

212 Items treated as receipts and expenses U.K.

The rules for calculating the profits of a property business need to be read with—

(a) the provisions of CAA 2001 which treat allowances as expenses of a property business,

(b) the provisions of CAA 2001 which treat charges as receipts of a property business, and

(c) section 748 (credits and debits in respect of an intangible fixed asset held by a company for the purposes of a property business carried on by it treated as receipts and expenses of the business).

213 Certain amounts brought into account under Part 3 U.K.

(1) The rules for calculating the profits of a property business need to be read with the following provisions of Part 3 (trading income)—

(a) section 42 (tied premises),

(b) section 43 (caravan sites where trade carried on),

(c) section 44 (surplus business accommodation), and

(d) section 45(3) (payments for wayleaves).

(2) Those provisions secure that amounts which would otherwise be brought into account in calculating the profits of the business are, or may be, brought into account instead in calculating the profits of a trade.

214 Relationship between rules prohibiting and allowing deductions U.K.

(1) Any relevant permissive rule in this Part—

(a) has priority over any relevant prohibitive rule, but

(b) is subject to the following provisions—

(i) section 56 (car F7 ... hire), as applied by section 210,

(ii) section 1288 (unpaid remuneration),

(iii) section 1290 (employee benefit contributions),

(iv) section 1304 (crime-related payments).

[F8 (1A) But, if the relevant permissive rule would allow a deduction in calculating the profits of a trade in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—

(a) does not have priority under subsection (1)(a), and

(b) is subject to any relevant prohibitive rule in this Part (and to the provisions mentioned in subsection (1)(b)).”, and]

(2) In this section “any relevant permissive rule in this Part” means any provision of this Part (apart from sections 231 to 234) which allows a deduction in calculating the profits of a property business.

(3) In this section “any relevant prohibitive rule”, in relation to any deduction, means any provision of this Part or Chapter 1 of Part 20 (apart from those mentioned in subsection (1)(b)) which might otherwise be read as—

(a) prohibiting or deferring the deduction, or

(b) restricting the amount of the deduction.

[F9 (3A) In this section “relevant tax avoidance arrangements” means arrangements—

(a) to which the person carrying on the trade is a party, and

(b) the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).

“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).]

(4) In this section any reference to any provision of this Part includes any provision applied by section 210.

Textual Amendments

F7 Words in s. 214(1)(b)(i) omitted (with effect in accordance with Sch. 11 paras. 65-67 of the commencing Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 53

F8 S. 214(1A) inserted (with effect in accordance with s. 78(5)-(7) of the amending Act) by Finance Act 2013 (c. 29), s. 78(4)(a)

F9 S. 214(3A) inserted (with effect in accordance with s. 78(5)-(7) of the amending Act) by Finance Act 2013 (c. 29), s. 78(4)(b)