Interest In Property

SCHEDULE A CHARGES 'profits from a business carried on for the exploitation of land in the UK' and this would include buy-to-let profits. Buy-to-let investors will therefore need to pool all profits and losses from their property portfolio to determine their Schedule A profit. In order to calculate the Schedule A profit we apply 'normal commercial accounting principles' which means that the accruals basis is used for income and expenses.

Schedule A expenses

The trading expenses rules in TA 1988 s 74 are applied to the Schedule A business. This includes the 'wholly and exclusively' rule which says that expenses cannot be deducted unless they are incurred wholly and exclusively for business purposes.

Consequently expenses such as advertising for tenants agents fees for collecting rent repairs to the property and other revenue items will be deductible in arriving at the Schedule A profits.

The...