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Taxation (UK) · Taxable total profits

Property Business, Interest and Other Income for Companies in ACCA Taxation (UK)

Updated 11 October 2026 · Fact-checked

A company's UK property income is taxed as a property business profit, and interest on non-trading loans is taxed as non-trading loan relationship income. Both are added to trading profit and chargeable gains to reach total profits. Use accruals, not cash, and deduct non-trading deficits and charitable donations after totalling.

Understand Property Business, Interest and Other Income

A company pays corporation tax on all its income and gains, not just trading profit. Each source has its own computation, and you then add them together. This topic covers three non-trade sources: UK property business, non-trading loan relationships and miscellaneous income.

UK property business covers rent from land and buildings in the UK. All the company's properties are treated as one business. Profits and losses on different properties are therefore netted off. A company is taxed on an accruals basis, so you use rent due for the accounting period, not cash received. Deduct allowable expenses such as repairs, insurance, agent fees and irrecoverable rent.

Loan relationships arise when a company lends or borrows money. Interest receivable and interest payable are taxed on an accruals basis too. If the loan is for the trade, the interest is dealt with in the trading profit computation. If it is not for trade purposes, it is a non-trading loan relationship. Net interest income is taxed as non-trading loan relationship income. Bank deposit interest is the usual example.

In the corporation tax computation, you start with trading profit, then add property business profit, non-trading loan relationship income, miscellaneous income and chargeable gains. This gives total profits before any deductions. Qualifying charitable donations are then deducted to reach taxable total profits. Dividends from UK companies are not taxed and are excluded, but they matter later for augmented profits.

If a trading loan relationship produces a net deficit, it is treated as part of the trading result and relieved under the trading loss rules. If a non-trading loan relationship produces a net deficit, the company may claim to set it against total profits of the same period. Any unused amount may be carried back 12 months against non-trading loan relationship profits only. Any remainder is carried forward and set against total profits of later periods, and a claim is needed to restrict its use. Read the question to see which relief it expects.

Key rules to remember

Property business profit
Rent accrued for the period − allowable expenses (repairs, insurance, agent fees, irrecoverable rent)
Accruals basis. All UK properties are one business, so a loss on one property is netted against profit on another.
Non-trading loan relationship income
Non-trade interest receivable − non-trade interest payable (accruals basis)
If the result is a deficit, it is relieved against total profits or carried forward. It is not simply ignored.
Taxable total profits
Trading profit + property business profit + non-trading loan relationship income + miscellaneous income + chargeable gains − qualifying charitable donations
Do not include UK dividends received. Deduct donations only after totalling the profits.
Corporation tax rates (FY2025)
Small profits rate 19%; main rate 25%; lower limit £50,000; upper limit £250,000
Limits apply to augmented profits. Marginal relief is covered on its own topic page.

How to solve Property Business, Interest and Other Income questions

Use the same layout for every question. It keeps each source separate and protects your marks.

  1. 1Identify the accounting period and whether it is 12 months. A shorter period means time-apportioning the limits later.
  2. 2List each income source: trading, property, loan relationships, miscellaneous, gains. Dividends from UK companies are excluded.
  3. 3For property, use rent accrued for the period, deduct allowable expenses, and net all properties together.
  4. 4For loans, decide if each is trade or non-trade. Trade interest goes in the trading computation. Non-trade interest receivable less payable gives the loan relationship figure.
  5. 5Check for any deficit, and apply the relief the question asks for.
  6. 6Add the sources to get total profits, then deduct qualifying charitable donations to reach taxable total profits.
  7. 7Apply the correct rate to taxable total profits, using the main or small profits rate or marginal relief as required.

Quickest way: Layout-first method

When to use it: Use this in Section C, or in a Section B case with a short multi-source company computation.

  1. Draw columns for: trading, property, loan relationships, gains, total.
  2. Fill each column from the question in turn, ticking off every number.
  3. Strike out any item that is not taxable income, such as dividends from UK companies.
  4. Total across, deduct donations, and state taxable total profits clearly.
  5. For objective questions, check: accruals, trade or non-trade, and whether the amount is deducted before or after totalling.

Common mistakes in Property Business, Interest and Other Income

  • Using rent received instead of rent accrued

    Students are used to the cash basis from individuals' property income.

    Fix: For companies, use the amount due for the accounting period. State the basis in your answer.

  • Putting non-trade interest in the trading profit

    Bank interest appears in the accounts alongside trading items.

    Fix: Remove it from the adjusted trading profit and include it as non-trading loan relationship income.

  • Including dividends from UK companies in taxable profits

    Dividends are income, and students carry the figure across by habit.

    Fix: Exclude them from total profits. Include them only when computing augmented profits for the rate limits.

  • Deducting qualifying charitable donations from individual sources

    Students confuse donations with expenses.

    Fix: Add all sources first, then deduct donations from total profits.

  • Treating each property separately

    Students apply individual-style thinking to each let.

    Fix: Net all UK properties together into one property business result.

  • Ignoring a non-trading deficit

    Students see a negative number and drop the source.

    Fix: Show the deficit and apply the relief the question allows against total profits or carry it forward.

Worked examples

Example 1

Z Ltd has a 12-month accounting period to 31 March 2026. Its adjusted trading profit is £90,000. It let two UK properties. Rent accrued: £30,000. Allowable property expenses: £8,000. It received bank deposit interest of £2,500 (non-trade) and paid £500 of non-trade loan interest. It received UK dividends of £4,000. Calculate taxable total profits.

Show the solution
  1. Property business profit: £30,000 − £8,000 = £22,000.
  2. Non-trading loan relationship income: £2,500 − £500 = £2,000.
  3. UK dividends of £4,000 are excluded.
  4. Total profits: £90,000 + £22,000 + £2,000 = £114,000.
  5. There are no donations, so taxable total profits equal total profits.

Answer: Taxable total profits are £114,000.

Example 2

Y Ltd has a 12-month period with trading profit of £60,000, property business profit of £15,000 and a chargeable gain of £10,000. It has a non-trading loan relationship deficit of £4,000 and paid a qualifying charitable donation of £2,000. Calculate taxable total profits, assuming the deficit is relieved against total profits of the period.

Show the solution
  1. Trading profit £60,000 + property profit £15,000 + chargeable gain £10,000 = £85,000.
  2. Relieve the non-trading deficit of £4,000: £85,000 − £4,000 = £81,000.
  3. Deduct the qualifying charitable donation of £2,000: £81,000 − £2,000 = £79,000.

Answer: Taxable total profits are £79,000.

Exam tips

  • Write 'accruals basis' beside property and interest figures. It earns method marks.
  • Always sort interest into trade and non-trade before computing anything.
  • List excluded items, such as UK dividends, with a zero or a note so the marker sees you considered them.
  • Deduct qualifying charitable donations last. Make that line visible.
  • Check whether the accounting period is shorter than 12 months before using the £50,000 and £250,000 limits.

Practice questions from Taxable total profits

Property Business, Interest and Other Income in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Property Business, Interest and Other Income: frequently asked questions

How is company property income taxed in TX-UK?

It is taxed as UK property business profit within corporation tax. You use rent accrued for the period less allowable expenses, and treat all properties as one business. The result is added to the company's other profits.

What is non-trading loan relationship income?

It is net interest income from loans not connected with the company's trade, such as bank deposit interest. You take interest receivable less interest payable on an accruals basis. Trade-related interest is dealt with in the trading profit instead.

Are dividends received by a company taxable?

UK dividends received by a company are not included in taxable total profits. They are still added when you compute augmented profits to test the profit limits for the rates.

What rates apply to taxable total profits?

For financial year 2025, the small profits rate is 19% and the main rate is 25%. The lower limit is £50,000 and the upper limit is £250,000, with marginal relief between them.