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Good day Sir,
Just for clarification, when calculating the trading profit deduction for the lessee, the accruals basis must be adopted to apply the amount to be included in their tax computation, however earlier in chapter 3, it was noted that from 2018/2019, a simple cash basis was applied and should be assumed to apply unless stated otherwise property income. Does the rule only apply to property income or did I miss something?
Grateful for your generous assistance as these lectures have been ever so helpful with my studies.
The specific rule shown in the notes applies to the lessee in respect of one item – the premium paid when the lessee is granted a short lease and it spreads the allowable tax deduction for the allowable part of the premium paid over the years of the lease.
The cash basis is applicable to the main source of property income – rental income – and as you rightly say should be assumed to apply unless stated otherwise in the question.
Tax relief is not given in full for the premium payment in the tax year in which it is paid but always by reference to the specific rule stated above.
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