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Rental Income From Surplus Commercial Accomodation

A question about how such income could be shown in a corporation tax return

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If a company with a UK trade (“Main Trade”) rents out some of its surplus business accommodation, should this ever be shown in a corporation tax return as trading income from a second UK trade (“Rental Trade”)?

I ask because I would have assumed that there are two alternatives here:

  1. If the various conditions regarding surplus commercial accommodation are met, it could include this income as part of the trading profits of “Main Trade” (i.e. not as a separate trade), or
  2. If it doesn’t meet the conditions, it would show it as Income from UK Land & Buildings.

Just wanted to check my understanding as the previous accountants show this income as income from a separate trade.

Thanks in advance if anyone could shed some light on this for me.

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By michaelblake
11th Aug 2017 21:21

Your understanding is correct. The letting of surplus business accommodation could never be a trade and the previous accountant has described it incorrectly.

The HMRC guidance at PIM4300 confirms your approach
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4300

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