75 Case V: basis of assessment

Summary

Income arising from rents and easements is chargeable to tax under Case V of Schedule D. All such income is treated as arising from a single source and the tax is computed on the full amount of the profits/gains arising in the year of assessment. Rents from uneconomic lettings are excluded from the Case V basis of assessment, and expenses incurred in respect of such lettings, and losses arising from them, are not allowable against other Case V income.

Details

Interpretation

(5) Section 96 gives the meaning of particular words and expressions used in this section and also provides for the application of certain constructions.

General

(1) Profits/gains arising from rents in respect of premises (including lands, tenements and hereditaments) and receipts in respect of easements are deemed for the purpose of the Income Tax Acts to be profits/gains within the charge to tax under Schedule D and the person entitled to such profits/gains is chargeable to tax under Case V of that Schedule. Excluded from this charge are payments of rent (including tolls, duties, royalties or annual or periodical payments in the nature of rent) and certain other payments chargeable to tax under Case IV of Schedule D by virtue of section 104.

(2) Profits/gains chargeable to tax under Case V are deemed to issue from a single source.

(3) Tax charged under Case V is computed on the full amount of the profits/gains arising within the year of assessment.

Uneconomic lettings

(4) Excluded from the Case V basis of assessment and from sections 97 (Case V computational rules) and 384 (treatment of Case V losses) is rent reserved under a lease which is insufficient, taking one year with another, to meet —

• the lessor’s cost of any obligations under the lease, and
• any expenses of maintenance, repairs, insurance and management of the leased premises (including lands, tenements and hereditaments) which are borne by the lessor.

Relevant Date: Finance Act 2019