6.5 When does a property business begin? Pre-letting expenditure
This is an important question because the landlord’s receipts and expenses cannot normally be included in the profits of a property business before that business has actually begun. This is an especially important issue when determining which expenses can be deducted in calculating the profits.
As with all rules, there are exceptions. It is possible to deduct ‘pre-letting’ expenditure which has been incurred within the seven-year period ending before the start date of the business. Two conditions apply:
•The expenditure is not otherwise allowable as a deduction of the rental business.