Taxation in the United Kingdom/Corporation tax/Rental income

Rental income is taxed under Schedule A, if it arises from UK landSection 15 of the Income and Corporation Taxes Act 1988, and under Case V of Schedule D if it arises from overseas landSection 18 of the Income and Corporation Taxes Act 1988.. The rules for UK and overseas land are the sameSection 70A of the Income and Corporation Taxes Act 1988. In most instances a company is deemed to have a single Schedule A business. If, however, it is a partner in a partnership, rental income from that partnership is deemed to be a separate Schedule A business.Section 15 of the Income and Corporation Taxes Act 1988. These rules are amended for life assurance companies.A life assurance company, by virtue of section 432AA of the Income and Corporation Taxes Act 1988 is deemed to have the following categories of business (for accounting periods beginning on or after 1 January 2007: solely linked basic life assurance and general annuity business; business linked to pension, child trust fund and/or individual savings account business; solely linked non-life long-term business; non-linked long-term business; business outside the long-term insurance fund. Additionally, UK land linked to overseas life assurance business is treated as a separate Schedule A business by virtue of section 441B of the Income and Corporation Taxes Act 1988 Rental income is calculated in the same way as trading incomeSections 21A and 21B of the Income and Corporation Taxes Act 1988.. In practice this means identifying the part of the profit shown in the financial statements that relates to rental income and making certain adjustmentsSection 42 of the Finance Act 1998. There are, however, some special rules that apply to taxing rental income that do not apply to trading income. These are: A Schedule A charge can arise on mutual businessSection 21C of the Income and Corporation Taxes Act 1988; There are special rules dealing with leases; There are special rules dealing with furnished holiday accommodation; There is a special rule allowing a deduction for expenditure on sea wallsSection 30 of the Income and Corporation Taxes Act 1988. Notes and references