BIM51555 - Builders, property dealers & developers: Income recognition: Schedule A

Rent received by a builder from a property held as trading stock should in law be excluded from the computation of trading profits and assessed under Schedule A (see BIM41000+). Any excess, of Schedule A deductions, over rent received may, however, be allowed as a trading expense instead of being carried forward under Schedule A.

A builder or property dealer may acquire a property, such as a block of flats, and buy out the tenants over a period, with a view to selling on the whole block. In such a case the expenses of the let flats should be separated from those relating to flats which are no longer let and have therefore ceased to be part of the letting business. Expenses attributable to the unlet flats can only be deducted in computing the profit or loss of the property dealing trade.