BIM41001 - Receipts: rents: rents are not trading income

Except in the case of 'tied' premises ( BIM46810 and BIM51430), rents received in respect of premises should, in law, be excluded, together with the related outgoings (see BIM41010), in computing the profits of a trade or profession (see Salisbury House Estate Ltd v Fry [1930] 15TC266) even where such rents are in respect of:

• excess accommodation let or sublet at premises occupied for the business – see BIM41015,
• lettings by a property-owning concern in the ordinary course of its business, or
• property owned as trading stock.

The liability in respect of rents so excluded is dealt with:

• For CT cases (and IT cases for years up to 2004-05) under:

• For IT cases (for 2005-06 onwards) under:

It remains so even if the properties are occupied under licences rather than leases (see Webb v Conelee Properties Ltd [1982] 56TC149). The essential difference between a licence and a lease is that a lease creates the legal relationship of landlord and tenant, whereas a licence is merely a permission to enter on the land of another person for an agreed purpose.

Where an employee occupies the premises, see BIM46820,

In the case of property held as trading stock, where there is an excess of expenses over rents received, see BIM51555.