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HMRC internal manual

Property Income Manual

Deductions: apportionment on sale of a let property

ITTOIA05/S320 and CTA09/S259

On the sale of an estate on interest in land any sale of part of a receipt or outgoing should be apportioned. The capital or revenue nature of the payment should be preserved.

Technical detail

ITTOIA05/S320 and CTA09/S259 apply to all apportionments of rents and other receipts and outgoings made between vendor and purchaser by virtue of a contract for the sale of an estate or interest in land, for example the sale of a freehold or leasehold interest, rent-charge, feu duty or ground annual.

The legislation does not apply to apportionments of income and expenses on transfer of a property other than by sale, for example on death or bankruptcy or by way of gift or exchange. Accordingly, income to which the deceased became entitled during his lifetime, or to which a bankrupt became entitled before he was adjudicated bankrupt, is wholly the income of the deceased or the bankrupt. If the property is subsequently sold by the personal representatives of the deceased or the trustee in bankruptcy, no part of that income should be treated for tax purposes as apportioned to the purchaser. Similarly, expenses paid after the date of death or bankruptcy should not be deducted in computing the liability of the deceased or the bankrupt.