Silly Firday afternoon question - rental income or part of sole trade?

Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
My client rented a room in a commercial property. The landlord then sold the property to my client. The whole property includes a room my client didn't rent; he therefore rents this room out to a tenant.

Buying the property was wholly and exclusively for the business - to allow him to remain in his place of work. Costs have been incurred in acquiring the premises, some capital and some revenue.

Q: The rent from the tenant has to be treated on the land and property pages, right? It can't be included with the sole trade? If so, does this mean the costs may have to be apportioned as appropriate? Capital is capital, so that shouldn't confuse. Revenue expenses (such as mortgage interest) may have to be split across trading and rental income - I assume a reasonable %age split applied to all relevant expenses will be acceptable?

This is one of those where I know it's rental income and needs treating as such but I think I'm getting my knickers in a twist because it's renting part of the commercial property that he also uses for work so would appreciate confirmation......!!

Thanks :)


  • Newbie
    Newbie Registered Posts: 229 Dedicated contributor 🦉
    Rental profits from commercial property are taxed in the same way as any other rental income. I would apportion the expenses by SqM. I believe you cannot claim the wear and tear allowance on commercial property but may be eligible for capital allowances. (I have assumed business premises rather than home with office)
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