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HMRC internal manual

Property Income Manual

Income chargeable: local authority grants & other contributions

Trading income principles apply

For property income purposes, the treatment of grants and subsidies from UK government departments, private amenity groups, local authorities or funds granted by European Union or associated bodies follows normal trading income principles (see BIM40450 onwards).

Receipts which may be taxable

The following grants or contributions are likely to be taxable:

  • contributions to expenditure on the repair of a let property,

  • insurance recoveries on policies covering non-payment of rent,

  • refunds or rebates of rental business expenditure,

  • grants to meet capital expenditure should normally be treated as reducing the qualifying capital expenditure for capital allowances purposes (to the extent that the grant relates to an item that capital allowances are claimed on).