Calculating property business income
by Stephen Relf
1. Premiums
1.1. Received by landlord
1.1.1. 50 years or less
1.1.1.1. Part income, part capital
1.1.2. More than 50 years
1.1.2.1. Capital
1.2. Paid by tenant
1.2.1. 50 years or less
1.2.1.1. Relief for income element
1.2.2. More than 50 years
1.2.2.1. Capital expense
2. Finance costs
2.1. Company
2.1.1. Loan relationship rules
2.2. Non-resident company
2.2.1. Income tax deductions to 5 April 2020
2.2.2. Loan relationship rules from 6 April 2020
2.3. Individual
2.3.1. Residential
2.3.1.1. Relief at basic rate only
2.3.2. Commercial
2.3.2.1. Relief as deduction
3. Trade rules apply
3.1. Generally accepted accounting practice
3.1.1. Possible cash basis for individuals
3.2. Subject to adjustments required by law
3.3. Revenue not capital expenditure
3.3.1. Wholly and exclusively
3.3.1.1. Uncommercial rents
3.4. Reliefs for individuals
3.4.1. £1,000 property income allowance
3.4.2. Rent-a-room relief
4. Capital expenditure
4.1. Residential property
4.1.1. No Capital Allowances
4.1.1.1. Save on furnished holiday lettings
4.1.2. Relief for replacing domestic items
4.2. Commercial property
4.2.1. Capital allowances for plant and machinery