SCHEDULES

SCHEDULE 45Statutory residence test

PART 3Split year treatment

81Special charging rules for property income

In section 270 of ITTOIA 2005 (profits of property businesses: income charged), after subsection (2) insert—

3

If, as respects an individual carrying on an overseas property business, the tax year is a split year—

a

tax is charged under this Chapter on so much of the profits referred to in subsection (1) as arise in the UK part of the tax year, and

b

the portion of the profits arising in the overseas part of the tax year is, accordingly, not chargeable to tax under this Chapter.

4

In determining how much of the profits arise in the UK part of the tax year—

a

determine first how much of the non-CAA profits arise in the UK part by apportioning the non-CAA profits between the UK part and the overseas part on a just and reasonable basis, and

b

then adjust the portion of the non-CAA profits arising in the UK part by deducting any CAA allowances for the year and adding any CAA charges for the year.

5

In subsection (4)—

  • “CAA allowances” means allowances treated under section 250 or 250A of CAA 2001 (capital allowances for overseas property businesses) as an expense of the business;

  • “CAA charges” means charges treated under either of those sections as a receipt of the business;

  • “non-CAA profits” means profits before account is taken of any CAA allowances or CAA charges.