Meg Saksida looks at various categories of income from property and how they are taxed.
Some types of income from property are obviously classified as ‘property income’ for the purposes of income tax (e.g., rental income from the letting of a furnished or unfurnished residential or commercial property).
However, there are many other kinds of income generated from the exploitation of land or property in the UK that are not so obvious.
A trading business take precedence
If a property business exploits the land, it will usually be charged to property income rather than trading income; but this is not always the case. There is an exception where there is an overriding trade.
For example, ultimately a guesthouse exploits the land and property for income, as the trade of being a guesthouse takes priority, and as such, the