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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
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Specific receipts: rents: letting surplus accommodation: rents may be treated as trading receipts: example

A company received rents of £62,000 per year from the letting of property as follows:

  • £27,000 related to the letting of premises that had formerly been in use as trade premises but were vacated on becoming surplus to requirements. No part of these premises was retained by the company for its own use.
  • £10,000 related to surplus land at a factory site. The company still used the factory and the remainder of the site.
  • £25,000 related to premises that the company had built 4 years previously, intending to occupy them itself, but which it found surplus to requirements before occupation and therefore let.

The company sought to include the rents received from letting, and associated expenses, in its computation of trade profits. Since, on the basis of the facts, the company did not satisfy the conditions in BIM41015, in respect of any part of the rental income receivable, the company’s application to treat these rents as trade receipts was refused.