Section 796 Alternative calculation of profits: trading income

(1)

This section applies if the individual has any rent-a-room receipts for the tax year which are the receipts of a trade.

(2)

The profits of the trade for the tax year are—

(a)

the sum of the amount of the rent-a-room receipts for the tax year arising from the trade and the amount of any relevant balancing charge, less

(b)

the deductible amount.

(3)

The deductible amount—

(a)

is L if all the individual's rent-a-room receipts for the tax year arise from the trade, and

(b)

otherwise, is—

\frac{L \times T}{R}

but, in either case, subject to a maximum of T.

(4)

In subsection (3)—

L is the individual's limit for the tax year,
T is the individual's rent-a-room receipts for the tax year arising from the trade, and
R is all the individual's rent-a-room receipts for the tax year.

(5)

In calculating the amount of any rent-a-room receipts for the purposes of this section, no deduction is allowed for expenses or any other matter.

Notes on Part 7

F1: Words in Pt. 7 heading substituted (16.12.2010) (with effect in accordance with Sch. 1 para. 36 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 1 para. 34 (with Sch. 1 para. 37)