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Rent. Property Income or Trade

I have inherited a new client (Partnership). They own a large office building which they use one floor for their business (Printing) and rent out the remaing floors. Rental Income amounts to approx £80k per annum. The previous accountants have included this as trade income. As the renting is not a temporary let of surplus space but an ongoing arrangement I believe this should be taxed as Property Income. Would others agree?

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yes it should be taxed as prop income

tho it would be fine to show it in the partnership accounts, obviously if the P is making a loss then loss relief may have been incorrectly claimed - one also presumes that ther is an agrement between the registered owner and the P. its not an LLP?

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National Insurance

The accounts I have seen, previous two years and the draft for this year show profits roughly equal to the rental income of around £80k. Therefore stripping out the rent the trade is breaking even. The last tax return I have seen has included rent in trading profits. I am thinking there is an opportunity here to resubmit tax returns for previous years and reclaim national insurance paid on misclasification of rents as trade profits.

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yes but

you cannot claim any loss on the trade against the property income and you are limited in your deductions from property income , incidentally has 10% wear and tear been deducted

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why wont they be able to offset the trade loss against the property income?

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