PIM1112 - Wayleaves and other income: Overview
Source: gov.uk (2025-02-04)


Income excluded from a property business

There are certain receipts which can arise out of the use of land and which are specifically excluded from a property business. For example:

yearly interest

income from the occupation of woodlands managed on a commercial basis, for example when you cut and sell the timber (see below)

income from the types of concerns listed below (which are taxed as trading income – see ITTOIA05/S12 and CTA09/S39):

mines and quarries (including gravel pits, sand pits and brick fields),

ironworks, gasworks, salt springs or works, alum mines or works and water works and streams of water,

canals, inland navigations, docks, and drains or levels,

fishing (see below),

rights of markets and fairs, tolls, bridges and ferries,

railways and other ways,

other concerns similar to those above.

lettings of tied premises by traders

farming and market gardening

Fishing

The fishing activities which are a 'concern' within ITTOIA05/S12 or CTA09/S39 are those carried on by a substantial commercial undertaking. The letting of fishing rights is not usually a 'concern' and the profits from it are included in the property business (see PIM1070 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1070)).

Hotels and guest houses

Profits from running hotels and guest houses are taxed under the rules for trades and are not part of a property business (see PIM4300 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4300)).

Tied premises

Under ITTOIA05/S19 or CTA09/S42 rents from tied premises connected to a trading activity are wholly trading receipts and do not form part of the property business. The same applies to the taxable amount of any premium received for occupying tied premises.

Caravan sites

The activities of a caravan site may amount to a trading activity, a mixture of trade and letting or a wholly letting activity depending on the level and type of services provided in addition to letting caravans. See PIM4300 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4300) for a general discussion of the principles in this area.

Where the owner of a caravan site is wholly operating a trade the receipts of that trade will include any receipts attributable to letting caravans.

Where the owner of a caravan site undertakes a mixture of trading and letting activity, under ITTOIA05/S20 or CTA09/S43 they can elect to treat the whole activity as a trade.

Where the owner of a caravan site undertakes only letting activity, or additional services provided are insufficient to represent a separate trading activity, the receipts will form part of the property business.

Lodgers and tenants in your own home

Receipts from renting a room in your own home represent property income, including payments for board, cleaning, laundry etc. Rent-a-room relief may apply: see PIM4000 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4000) onwards.

Extra services to tenants

Where a taxpayer lets a property which is not their home and they provide additional services to their tenants it is unlikely that it would amount to a trade unless the additional services are sufficient to change the fundamental nature of the overall activity to a trade. See PIM4300 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4300).

Where there is a property business with additional services:

rent or other payments for the use of the property and furniture, furnishings, fittings etc. are receipts of the property business.

the additional services may be sufficient to represent a trade which is separate to the property business. If there is not a trade the receipts may be taxed as miscellaneous income (ITTOIA05/S688 or Part 10 CTA09).

Letting surplus trade accommodation

Under ITTOIA05/S21 and CTA09/44 rent received from letting surplus trade accommodation and related expenses can be taken into account in calculating the profits of the trade. See PIM4300 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4300) and the Business Income Manual at BIM41015 (https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim41015).

Rent from overseas properties

A person who receives income from overseas properties has an overseas property business, which is treated separately from their UK property business. See PIM4700 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4700) onwards.

Profits derived from the occupation of land

Some activities involve the use of land but do not represent generating income from land. They include:

Farming and market gardening are treated as a trading activity, under sections 9 & 267 ITTOIA05, or sections 36 & 208 CTA09

Commercial occupation of land other than woodlands is treated as a trading activity, under sections 10 & 267 ITTOIA05, or sections 38 & 208 CTA09

Commercial occupation of woodlands is treated as neither a trading or property activity and the income is exempt from income tax (sections 11, 267 & 768 ITTOIA05) and corporation tax (sections 37, 208 & 980 CTA09

Wayleaves, easements and rents receivable in connection with mines and other concerns

For guidance see:

PIM1114 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1114), PIM1117 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1117) and PIM1118 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1118) for IT cases,

PIM1115 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1115), PIM1117 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1117) and PIM1118 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1118) for CT cases.

Other property income excluded from the UK property business

PIM1113 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1113) discusses several sources of property income which are not included in the property business.