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HMRC internal manual

Business Income Manual

Specific receipts: rents: letting surplus accommodation: expenses

Where rents received in respect of excess accommodation let, or sublet, by a trader are excluded in computing the profits of a trade (or profession) any deduction in respect of rent and other outgoings, such as rates, insurance, repairs, etc. should be restricted to the proportion attributable to the premises (or the part of the premises) actually used for the purposes of the trade. A contention that the measure of the deduction under this head should be only the net amount of rent paid and other outgoings less rent received should not be advanced.

Where rents received are numerous (for example, in the case of concerns which make a practice of acquiring premises with surplus accommodation), the adjustment of debits should extend to such items as costs of management, advertising for tenants and so on.

Where premises (or portions of premises) which are normally let or sublet are vacant, any outgoings relating to the period during which they are unlet should be dealt with in the same manner as if the letting or subletting continued.

See BIM41015 for the inclusion in calculating trade profits of receipts and expenses in respect of temporarily surplus accommodation.