Income from sub Letting part or Business premises

Original Post:

K

keravon

Free Member
Jul 13, 2022
3
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  • #1
    HI All,

    Someone mentioned to me today that income earned from sub letting part of your business premises does NOT go down as a sale on your tax return. I am a sole trader with a business premises. I sub let part of it and have always declared the rent from this as a sale.

    Any thoughts would be much appreciated.

    Thanks
     
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    MyAccountantOnline

    MyAccountantOnline

    Business Member
    Sep 24, 2008
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    myaccountantonline.co.uk
  • #4
    keravon said:
    Thanks for your reply. Is there is any financial benefit in declaring it as income from property as opposed to a straight forward sale on the tax return?

    Thanks Again for your help
    Click to expand...

    You need to ensure you make a correct tax return.

    A benefit - possibly being able to claim the Property Allowance
     
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    K

    keravon

    Free Member
    Jul 13, 2022
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  • #7
    I rent the whole premises. Sub let the ground floor. I declare the entire rent for both floors as my main business expense. Then add the rental income form the ground floor as a sale.

    If i declare the ground floor rent as rental income will the tax rate on that amount be the same as if it was sale? Just trying to figure out the pros and cons of this whole situation.

    Thanks
     
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    WaveJumper

    WaveJumper

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    • Business Listing
    Aug 26, 2013
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  • #8
    I assume then you have your landlords permission to be subletting ? On the tax question it may pay in the long run to seek out the advice of an accountant save you a lot of headaches going forward and possible save you a lot of money too.
     
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    P

    PCD

    Free Member
    Sep 24, 2015
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  • #10
    It is possible to treat rental income from temporarily surplus business property as business income (see HMRC guidance PIM4300) but unlikely to apply in this case as it does not appear to be temporary. I doubt HMRC would get too excited about this unless the rental income was producing a large loss. If it is a profit they would probably be collecting more NI than if shown on the property pages.
     
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    B

    Bobbo

    Free Member
    Jul 7, 2020
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  • #11
    keravon said:
    Thanks for your reply. Is there is any financial benefit in declaring it as income from property as opposed to a straight forward sale on the tax return?

    Thanks Again for your help
    Click to expand...
    No penalties for a carelessly prepared tax return

    No Class 4 NIC on property income. of course you'll need to apportion the rent you pay for the whole building between trading expenses and property expenses, along with any other costs you pay which apply to the whole of the building, so your 'profit' may not be that much.

    also if you're vat registered then other considerations:
    - HMRC may wonder why the 'supplies' per your VAT returns are less than the reported trading turnover on your VAT return
    - if you haven't opted the interest in the building you are sub-letting then there are partial exemption considerations
     
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