Part 4

Property income
Chapter 5

Profits of property businesses: other rules about receipts and deductions

Adjustment on change of basis

Giving effect to positive and negative adjustments
262
1
An amount by way of adjustment must be calculated in accordance with section 182, which applies in relation to a UK property business as it applies in relation to a trade.
2
If the amount produced by the calculation is positive—
a
the amount is brought into account as a receipt in calculating the profits of the UK property business, and
b
the receipt is treated as arising on the first day of the first period of account for which the new basis is adopted.
3
But if there is a change of basis resulting from a tax adjustment affecting the calculation of any amount brought into account in respect of depreciation, the receipt is treated as arising only when the asset to which it relates is realised or written off.
4
If the amount produced by the calculation is negative—
a
a deduction is allowed for the amount as an expense of the UK property business in calculating the profits of that business, and
b
the expense is treated as arising on the first day of the first period of account for which the new basis is adopted.
5
But if there is a change of basis resulting from a tax adjustment affecting the calculation of any amount brought into account in respect of depreciation, the expense is treated as arising only when the asset to which it relates is realised or written off.
6
This section is subject to section 183 (no adjustment for certain expenses previously brought into account) which applies in relation to a UK property business as it applies in relation to a trade.