Property Business Expense on Cessation

Written by yasiradnan94
13 August 2021

Where a property business ceases there is a relief for expenses incurred in relation to the business after it has ceased. The business typically would cease where the property is no longer let or is sold.

The circumstances in which this relief is available is where there is a qualifying payment made by the taxpayer.  A qualifying payment includes a payment for the remedying of defective work and legal costs in connection with such defects. Another example would be for expenses incurred to collect any outstanding debt.

The relief is given against other income and the expense has to have been incurred within 7 years of the business ceasing.

Example

Adnan sold his buy to let property on 7th September 2015. In June 2021 he lost a court case for defective services and is ordered to make a compensatory payment of £5,000.

His income for 21/22 tax year from his salary is £35,000 gross. Adnan can obtain relief and a tax refund provided a claim is made by 31st January 2023.

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