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HMRC internal manual

Property Income Manual

Introduction: start of current property income regime: CT

Key points on current rules

  • The concept of a CT Schedule A business is introduced.
  • UK furnished lettings and furnished holiday lettings previously taxed under Schedule D Case VI are now within Schedule A and subject to the same basic rules. Furnished holiday lettings within ICTA88/S503 - S504 keep their special reliefs.
  • Income from property profits and losses are computed in the same way as trading profits or losses.
  • Companies will be able to set CT Schedule A losses sideways against total profits and to surrender them as group relief (that is, they will broadly fall to be relieved in the same way as management expenses under ICTA88/S75) - see PIM4230. The CT Schedule A loss relief provisions are in ICTA88/S392A and S392B.
  • Capital allowances are deducted in arriving at the taxable profit and not as a separate item. Similarly, balancing charges are added to the profit.
  • The corporate interest rules in FA96 continue to apply. So unlike IT cases, interest etc. is not an expense in computing Schedule A profits.
  • The management expenses rules in ICTA88/S75 continue to apply to qualifying expenditure of investment companies, which is not admissible under the current Schedule A rules.
  • Premiums are taxed in exactly the same way as before.
  • It is no longer possible under CT Schedule A to carry-back surplus capital allowances for set-off against profits of the previous accounting period because the method of giving relief is no longer by discharge or repayment of tax, (see PIM3000 onwards).

Except where indicated to the contrary (e.g. the different treatment of Schedule A losses) the guidance in the PIM applies equally to IT and CT cases.


The legislation for current CT Schedule A was introduced by FA98/S38 and FA98/SCH5.