How is property income taxed for companies?
Answered 11 March 2026
How is Property Income Taxed for Companies?
What the law says
Definition of a UK Property Business
A company's UK property business consists of every business which the company carries on for generating income from land in the United Kingdom, and every transaction which the company enters into for that purpose otherwise than in the course of such a business.
The Charge to Corporation Tax
The charge to corporation tax on income applies to the profits of a property business (CTA 2009, s.209).
Computation of Profits
Losses (and by extension profits) of a UK property business or overseas property business are calculated on the same basis as profits of a trade, by virtue of CTA 2009, s.210 (which applies s.47 of that Act). Expenses of a UK property business or an overseas property business are recognised as deductible amounts for corporation tax purposes.
Loss Relief
Relief is available for losses made in a UK property business or overseas property business under Chapter 4 of Part 4 of CTA 2010. Where a company with an investment business ceases to carry on a UK property business, unrelieved property losses may be carried forward and treated as expenses of management deductible under CTA 2009, s.1219.
Non-Resident Companies
From 6 April 2020, non-resident companies carrying on a UK property business, or having other UK property income, are brought within the scope of UK Corporation Tax (rather than Income Tax). Any UK property business losses that arose under the prior Income Tax regime are carried forward into the Corporation Tax regime and used against future profits of the same UK property business or non-trade loan relationship profits relating to that business; they cannot be used against other profits or surrendered as group relief.
HMRC guidance / practice
HMRC's Property Income Manual covers how rents from UK properties are taxed. Detailed guidance on how property income is taxed can be found there.
Profits from land may be taxed in two ways — either as profits from a trade or as profits from a property business. Where a business is carried on by a company on land owned by an individual, it is necessary to look at how that company is taxed to determine whether the profits are taxed as from a trade or from a property business.
For non-resident companies, HMRC guidance confirms that from 6 April 2020 they are brought into the Corporation Tax regime for UK property profits, and that pre-commencement financing costs that would not otherwise be relievable may qualify for relief under special provisions introduced in FA 2020 (s.330ZA / s.607ZA).
Summary
| Feature | Rule |
|---|---|
| Charge | Corporation Tax on income (CTA 2009, s.209) |
| Definition | Every business/transaction generating income from UK land (CTA 2009, s.205) |
| Computation | Same basis as trading profits (CTA 2009, s.210) |
| Losses | Carried forward against future property business profits (CTA 2010, Part 4, Ch.4) |
| Non-residents | Within CT (not IT) from 6 April 2020 |
Citation sources
Partnership Manual Guidance on partnerships and how they are taxed in the UK. PAYE Manual Guidance for staff working through PAYE processes for individuals and employers. PAYE Settlements Agreements Manual What a PAYE Settlement Agreement (PSA) is and how to deal with it. Pensions Tax Manual The legislation and regulations behind the pension schemes tax regime. This manual replaced Registered Pension Schemes Manual from 2015. Property Income Manual How rents from UK properties are taxed.
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