Taxation in the United Kingdom/Corporation tax/Rental income

Rental income is taxed under Schedule A, if it arises from UK land, and under Case V of Schedule D if it arises from overseas land. The rules for UK and overseas land are the same.

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. These rules are amended for life assurance companies.

Rental income is calculated in the same way as trading income. In practice this means identifying the part of the profit shown in the financial statements that relates to rental income and making certain adjustments 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 business ;
 * 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 walls.