Taxation in the United Kingdom/Legislation/Section 15 of the Income and Corporation Taxes Act 1988

This Section sets out Schedule A, the charge to tax arising from income on UK land.

The charge to tax
Subsection (1) sets out the four paragraphs of the charge.

Paragraph 1 raises the charge on "the annual profits arising from a business carried on for exploitation, as a source of rents of other receipts, of any estate, interest or rights in or over land in the United Kingdom. To the extent a transaction is entered into for such exploitation it is treated as being entered into in the course of such a business. All such property businesses and transactions by a person are treated as if it is one business being carried on. There are two exceptions for this: first in respect of non-resident companies (see Subsection (1A)) below; second in respect of life insurance companies, where there is a separate rule in Sections 432AA and 441B(2A) of ICTA.

Paragraph 2 carves out certain items from the charge to Schedule A:


 * Profits arising from the occupation of land;
 * Profits charged to tax under Case I of Schedule D under Section 53(1) of ICTA (farming and marketing gardening) or Section 55 of ICTA (mines, quarries and other concerns);
 * Receipts or expenses taken into account in the taxation of tied premises (under Section 98 of ICTA);
 * Rent taxed under Schedule D under Section 119 of ICTA (rent, etc. payable in connection with mines, quarries and other concerns) or under Section 120(1) of ICTA (certain rent, etc. payable in respect of electric line wayleaves);
 * Credits and debits arising from loan relationships or derivative contracts.

Paragraph 3 deems rights in static caravans and houseboats to be rights in UK land for the purposes of Schedule A.

Paragraph 4 brings income receipts or other consideration received from the provision of furniture in furnished lettings into Schedule A, unless the receipts are charged under Case I of Schedule D as receipts of a furniture letting trade.

Other Subsections
Subsection (1A) provides that for non-UK resident companies, businesses carried on and transactions entered into by it, the profits on which are within the corporation tax charge, are charged to corporation tax under Schedule A. However, a UK property business that falls to be within the charge to income tax is charged to income tax under Chapter 3 of Part 3 of ITTOIA. If a non-resident company has some property business within the charge to corporation tax, and some within the charge to income tax, it is treated as though it has two separate property businesses.

Subsection (3A) provides that Subsection (1) applies for corporation tax purposes, but not for income tax purposes (except insofar as it is necessary for them to apply for income tax purposes to ensure the application of Subsection (1) for corporation tax purposes.

Subsection (4) Notes that Part II of ICTA contains more information on the charge to Schedule A for corporation tax purposes, and that Part II of ICTA also contains more information on the income tax charge to profits on a property business under Chapter 3 of Part 3 of ITTOIA (which doesn't apply to entities within the charge to corporation tax).