Property Business Income - Lecture 6

Question 1

Property business income

Answer 1

Income from UK land and buildings for tax year

Question 2

Assessable portion lease premium

Answer 2

Premium - (2% x (duration of lease - 1) x premium)

Question 3

Disallowable expenses property business

Answer 3

Capital expenditure for residential property unless loft/ cavity insulation up to £1500

Question 4

Interest paid to purchase property to rent

Answer 4

75% interest can be deducted

Question 5

Two methods for property business income computation

Answer 5

• Normal (accruals)

- Cash basis (Actual)

Question 6

Rent a room relief

Answer 6

For individuals who rent out part of main residence

Question 7

Eligible for RaRR accommodation must be (2)

Answer 7

• Furnished

- Part of taxpayers’ only main domestic residence

Question 8

RaRR relief threshold

Answer 8

Gross rental income up to £7500 ignored

Question 9

If gross rental income >£7500 (2)

Answer 9

• Income taxed under property business profit in normal way

- Alternative method - tax excess over £7500 as gross rental income, ignoring expenses

Question 10

Property business profits/ losses

Answer 10

Profits/ losses pooled to find net profit assessment for tax year

Question 11

Property business losses

Answer 11

Net property losses only carried forward against future property business profits

Question 12

Furnished Holiday Lettings income

Answer 12

Treated as trading income

Question 13

FHL to qualify must: (4)

Answer 13

• Be available for letting >210 days per tax year
• Actually let for > 105 days per tax year
• Not occupied by same person for more that >31 consecutive days in 155 days
• Let on commercial basis with view to making a profit

Question 14

Benefits of FHL (3)

Answer 14

• Capital allowances available for furniture, fixtures and fittings
• Loss relief available against total income in loss making tax year
• Capital gains tax reliefs available on property and entrepreneur’s relief rate applies to gains on sale property