Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Property Income Manual

Beginning and end of a rental business: legislative references for post-cessation receipts and expenses

IT cases up to 2004-05 and CT cases up to 2007-08

ICTA88/S21B applies to Schedule A businesses the post-cessation receipts and expenditure rules for trades of ICTA88/S103 - S106, S108, S109A and S110. You can find guidance on the post-cessation receipts and expenditure legislation at BIM80500 onwards.

Reference is made above to post-cessation expenses when there are no post-cessation receipts to set them against. The sideways relief referred to is that provided by ICTA88/S109A. The types of expenditure are set out in subsection (2). Most of them are unlikely to arise in a rental business apart from (d) - the cost of collecting debts. The relief for bad debts is in subsection (4). 

IT cases for 2005-06 and 2006-07

The scope of the legislation on post-cessation receipts and expenses is unchanged.

The legislation on post-cessation receipts is now in Chapter 10 of Part 3 of ITTOIA05 and the charging section is ITTOIA05/S349. In particular ITTOIA05/S351 applies the trading provisions:

  • ITTOIA05/S254 and ITTOIA05/S255 (allowable deductions),

  • ITTOIA05/S257 (election to carry back),

to rental businesses. 

IT cases for 2007-08 onwards

The scope of the legislation on post-cessation receipts and expenses is unchanged. The legislation on post-cessation property relief is now in ITA07/S125.

A claim for post-cessation property relief is possible if a taxpayer ceases to carry on a UK property business and within 7 years makes a ‘qualifying payment’ or a ‘qualifying event’ occurs in relation to a debt of the business. These terms are defined in the following provisions which apply for the purposes of post-cessation property relief as they apply for the purposes of post-cessation trade relief:

  • ITA07/S97: meaning of ‘qualifying payment’,

  • ITA07/S98: meaning of ‘qualifying event’ etc,

  • ITA07/S99: reduction of relief for unpaid trade expenses, and

  • ITA07/S100: prohibition against double counting.

If there is insufficient income to absorb the amount claimed by way of post-cessation property relief, the taxpayer may be able to treat the unused part as an allowable loss for CGT purposes. See TCGA92/S261D and 261E.

CT cases for 2008-09 onwards

The legislation covering post cessation receipts is in CTA09/S280-286.

The legislation which allows post cessation expenses to be set against post cessation receipts or carried forward against future post-cessation receipts is in CTA09/S196-197.