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HMRC internal manual

Property Income Manual

Deductions: specific items: apportionment on sale or purchase of let property: effect


This page explains the treatment for tax purposes of incomings or outgoings that are apportioned between the vendor and purchaser of let property. There are examples at PIM2240.

Technical detail

When land is sold, the contract usually requires that receipts or outgoings for a period are apportioned between vendor and purchaser. The amount apportioned is often dealt with as an adjustment to the amount to be paid over on completion of the sale.

It is usually safe to assume that an apportionment of rents and relevant expenses has been made. Only make enquiries about apportionments in cases where it appears that material amounts may be involved. In cases where you do make enquiries it will often be helpful to ask to see the completion statement. It will not normally be necessary to make enquiries where the accounts basis has been used, a reliable agent is involved who is not likely to omit the adjustment, or you can work out what the figures should be by knowing the rent and the due payment dates.


ICTA88/S40 requires the following treatment of apportioned amounts for tax purposes.

Incomings or outgoings falling due after contract

Subsection (1) applies where the contract requires receipts or outgoings falling due after the time of the contract to be apportioned between vendor and purchaser. The vendor receives part of the incoming, or pays part of the outgoing, as trustee for the purchaser:

  • the purchaser’s part is treated as if it became receivable or payable immediately after the time to which the apportionment is made,
  • the vendor’s part is treated normally.

See example 1 in PIM2240.

Incomings or outgoings falling due before contract

An apportionment may be made of an amount which fell due before the contract date. The vendor did not receive it or pay it as trustee for the purchaser, but the same treatment is given anyway - subsection (2). See example 2 in PIM2240.

Receipt or outgoing payable in arrear after completion

The agreement may allocate to the vendor part of an incoming or outgoing becoming due after the expected completion date - subsection (3):

  • the purchaser’s part is treated as reduced in computing the purchaser’s income,
  • the vendor’s part is treated as if it became due immediately before the time to which the apportionment is made, commonly immediately before the completion.

See examples 3 and 4 in PIM2240.


This section is much shorter than ICTA88/S40. The reason is that rental business profits are now computed on the accruals basis and not the entitlement basis, so most of ICTA88/S40 is redundant. Only ICTA88/S40 (3) (b) has been retained. This is an anti-avoidance provision that preserves the capital or revenue nature of any amount due or paid in arrears and apportioned by the buyer to the seller on the sale of land.