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  • Tax Memo - Corporation tax - What is a business activity? - Trades - Specified activities - Property rental - 2185
    Property rental income is generally assessable as property income (¶7000). However, certain receipts may be treated as trading income where they are ancillary to an existing trade and arise from temporarily surplus business accommodation. This does not apply to property which is exclusively let as a portion of the property must continue to be used for trading purposes. In addition, the rental received must be comparatively small (¶23655).
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  • Tax Memo - Corporation tax - Chargeable profits - Trading income and expenses - Trading expenses - Wholly and exclusively - 3365
    Expenditure will be deductible if it is incurred wholly and exclusively for the purposes of the trade. There can be no duality of purpose (but see ¶3370 for the ability to apportion). The only reason for incurring the expenditure must be to benefit the trade. The question of whether expenditure is exclusively for the purposes of the trade is by its very nature subjective and has led to a volume of case law, with each case being decided on its own particular facts. What is key for every decision is the taxpayer's...
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  • Tax Memo - Income tax - Income from UK land and property - Taxable profits - Revenue expenditure - 23410
    The principles discussed at ¶3355 - ¶3685 also apply to property businesses. In addition, where a rental property is temporarily empty (for example, between tenancies), expenditure incurred during a void period may still be deducted provided it relates wholly and exclusively to the rental business. - The rules relating to pre-trading expenditure (¶3560) and post-cessation expenditure (¶3465) apply equally to the operation of a property business. - Capital expenditure on the construction of a sea wall or...
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  • Tax Memo - Income tax - Income from UK land and property - Other special situations - Surplus business accommodation - 23655
    Where a trader receives rental income from the letting of surplus business accommodation, this may be included in the trading profit calculation. This is only possible where the: - premises are partly used for the trade and partly let; - let accommodation is temporarily surplus to requirements; and - rental income is comparatively small. For income tax purposes, accommodation is temporarily surplus to requirements if: - it has either been used for the purposes of the trade, or acquired, within the last 3 years;...
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