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HMRC internal manual

Property Income Manual

Deductions: general rules: applying the wholly & exclusively rule

Dual purpose expenditure

Strictly, if an expense is not wholly and exclusively for the purposes of the rental business, it may not be deducted. In practice, though, some dual purpose expenses include an obvious part which is for the purposes of the business. We usually allow the deduction of a proportion of expenses like that. An example of the business proportion of car or van expenses is at PIM2005.

When expenses may be apportioned

You may allow a proportion of an expense when a definite part or proportion of it is wholly and exclusively for the purposes of the rental business. This is the same rule that we apply for trades - see BIM42130.

Use of guidance material for trades

The instructions about the ‘wholly and exclusively’ rule in BIM37000 onwards are applicable to a rental business as they are to trades. Since the ‘wholly and exclusively’ rule applies in relation to a rental business as it does in relation to a trade, the various Tax Cases mentioned in the Business Income Manual may be used in interpreting the meaning of ‘wholly and exclusively’ for a rental business.

The guidance above applies equally to CT Schedule A as from 1 April 1998.