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HMRC internal manual

Property Income Manual

Property allowance: contents: computations: partial relief (two property businesses - UK and overseas)

If the individual elects for Partial Relief and their relevant property income for the tax year includes relievable receipts from two property businesses then the taxable profits are calculated using the following steps:

Step 1 – Calculate Total Receipts of the relevant property businesses:

Individuals should calculate the total amounts which would be brought into account as a receipt in calculating the profits of each of their relevant property businesses for the tax year.

Step 2 – Subtract the Deductible Amount from Receipts:

Individuals then subtract an amount from the total receipts for each property business given in Step 1 above. They cannot also deduct any expenses of either property business that would otherwise be allowable.

This will leave them with a figure of taxable profits for each of the property businesses.

The total amount to be subtracted from each business is the deductible amount. The combined deductible amount for both property businesses must not exceed the £1,000 threshold for the allowance. The amount of each allowance to be subtracted from each property business can be distributed between the different businesses based on the individual’s preference.

However, as is the case with a single property business, the amounts subtracted under this step cannot be used to produce a loss for either property business.

See an example of this computation at PIM4484