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HMRC internal manual

Company Taxation Manual

Corporation Tax: management expenses: Property business

CTA09/S1219(3)(b) and CTA09/Part 4

Where a company with investment business also has a property business within the meaning of CTA09/S204 some part of the emoluments of employees and directors may refer to the management of the properties.  That part of the emoluments should be deducted in the computation of the profits of the property business, and not as an expense of management under CTA09/S1219.

You should ensure, where there is a balance which is not deducted in the calculation of the profits of the property business that excessive remuneration is not allowed as an expense of management (CTM08370) and that any unpaid remuneration is dealt with in accordance with CTA09/S1249 and S1250 (CTM08470).If you have a company with investment business  with a property business, where there is likely to be difficulty in agreeing the amount of admissible management expenses, you should make a clear distinction between:

  • those items which the company claims as deductions in the computation of the profits of its property business, and
  • the expenses incurred in managing its investment business which can be claimed as management expenses under CTA09/S1219.

The distinction is important because:

  • expenses otherwise deductible in the computation of  total profits or deductible in calculating any component of total profits (which would include the calculation of the profits of a property business)cannot be deductible as management expenses under Section 1219(3)(b)

There is guidance on appeals at CTM08600.