When does my property business start for tax purposes?
When a UK property business commences for corporation tax, how pre-commencement costs are treated, and what {siteName} shows on your CT600.
When does your UK property business actually "start" for corporation tax purposes? This matters more than you might think — it changes how your costs are treated, when they reduce your tax bill, and what TinyTax shows on your CT600.
This guide covers HMRC's rule (PIM2505), what it means for first-year property companies that haven't let a property yet, and how TinyTax handles it.
The simple version
A UK property business begins when you first let a property to a tenant. Not when you incorporate the company. Not when you exchange contracts. Not when you start advertising. The trigger is the first day a tenant has the right to occupy.
Until that happens:
- Costs you've incurred are called pre-commencement expenditure
- They are not a current-year property loss
- They are not offset against this year's other income
- They are deemed to be incurred on the first day of the period your business actually begins, and deducted in that future period instead
Why this matters
Two property companies with identical figures can have completely different tax outcomes depending on whether they've commenced.
Example: SetupCo Ltd, year 1, no tenant yet
- Bank interest from director's loan: £389
- Admin / legal / advertising costs: £759
- Accounting result: £370 loss
| Box | Amount |
|---|---|
| Box 170 (interest) | £389 |
| Box 250 (s.62 relief) | £389 |
| Box 315 (chargeable profit) | £0 |
| Box 440 (CT) | £0 |
| Box 805 (loss arising) | £759 |
| Carry forward in computation | £370 |
| Box | Amount |
|---|---|
| Box 170 (interest) | £389 |
| Box 250 | £0 |
| Box 315 (chargeable profit) | £389 |
| Box 440 (CT @ 19%) | £73.91 |
| Box 805 (loss arising) | £0 |
| Pre-commencement total | £759 (carried forward, activated in commencement period) |
How TinyTax handles it
When you select "Property Company" and reach the P&L block, TinyTax works out which case applies based on the figures you enter and your filing history.
Most customers see nothing new
If you have rental income in this period (Box 190 > 0), or you've filed a return with rental income in any earlier period, your property business has commenced — there's nothing to ask. The form behaves as it always has.
If you've answered the commencement question on a previous visit, your saved answer takes priority over inference. You'll see a small acknowledgement of your answer (either the "✓ Property business commenced" line or the "not yet commenced" banner, depending on which you picked), with a one-click link to flip it if you've changed your situation. This is intentional — once you've told us your status explicitly, we don't second-guess you.
First-year, no rental income yet
If this is your company's first accounting period and there's no rental income, TinyTax shows a small banner above the P&L block:
> ℹ️ Property business not yet commenced — based on your figures and filing history, we're treating this as a pre-commencement period. Your costs will be carried forward and deducted in the period your first tenant moves in (HMRC's PIM2505 rule). > > [I've already let a property →]
Click the override link if you actually have let a property in this period — TinyTax will switch to treating you as commenced and ask for the date your first tenant moved in.
Year 2+ with no rental history
If you're filing for a second or later period and there's no rental income in this period or any earlier one, TinyTax can't tell whether you've commenced. You'll see a Yes/No question above the P&L:
> Has this company ever let property to a tenant? > > Including any tenant in this accounting period or any earlier period. Property business commencement is a one-time event — once you've let a property, the business stays commenced even in years with no rental income.
Pick Yes if at least one property has been let to a tenant at any point. Pick No if no property has been let yet.
What counts as "letting"?
For HMRC purposes, a property business begins when a tenant has the right to occupy. Practical signals:
- Yes, commenced — a tenancy agreement is in place and the tenant has moved in (or has the right to move in from a particular date), even if no rent has been received yet
- Yes, commenced — a property is being held out for letting and a tenant has actually taken occupation, even briefly
- No, not commenced — you've bought a property and are renovating it before marketing
- No, not commenced — you're advertising a property but no tenant has signed yet
- No, not commenced — the company exists and has incurred admin / set-up costs but doesn't yet own a property
What happens to my pre-commencement costs?
If you tell TinyTax the business hasn't commenced yet, those costs aren't lost — they're parked. TinyTax stores your pre-commencement total against each filing as `pre_commencement_expenses`, so it persists across periods and is recoverable when the property business commences.
When you file the return for the period your first tenant moves in, HMRC's rule (CTA 2009 s.61) treats those accumulated costs as if they were incurred on day 1 of that period. They're then deducted in that AP, against rental income or other profits.
Important practical note: TinyTax now persists the pre-commencement total per period, but the year-of-commencement entry flow that automatically brings the accumulated total into the activation period's return is still being built. For now:
- The pre-commencement amount is captured on each return you file as not-yet-commenced
- Keep your own record of the cumulative total too — your accountant or HMRC will want it
- When the period of commencement arrives, contact support before filing and we'll help you bring the accumulated pre-commencement total into that return correctly
Common questions
"I bought a property mid-year and let it on day 1 — am I commenced for the whole AP?"
Yes. Once any property has been let in the AP, the business is commenced from the date the first tenant moved in. Costs incurred before that date in the same AP can still be pre-commencement expenditure, but in practice most TinyTax customers in this situation just treat the whole AP as commenced and don't bother with the split.
"I let a property but the tenant left and there are no others — am I still commenced?"
Yes. Commencement is a one-time event. Once you've let property, the business stays commenced even in years with no rental income. Any costs in those gap years are normal property business expenses, not pre-commencement.
"What if I sell the property before letting it?"
If a property was bought to let but sold before any tenancy started, you never commenced for that property. Whether the costs become property business expenses (because the company is still planning to let other properties) or get reclassified entirely depends on the facts. This is genuinely complicated — if it applies to you, talk to your accountant.
"Why does the form ask this if I picked Property Company?"
Selecting Property Company in TinyTax sets the tax-calculation path correctly — it's a structural choice about what your company is. The commencement question is a temporal one: at this exact AP, has the property business started yet? Both can be true at once. A property company that hasn't commenced yet is still a property company — it's just at the pre-commencement stage of its life.
Why we ask this
Before TinyTax added the commencement question, all property companies were treated as commenced regardless. That was correct for ~99% of filings (most property companies have rental income to declare) but wrong for first-year companies with admin costs and bank interest but no tenants — those filings recognised a "current-year property loss" that, strictly under PIM2505, hadn't yet been incurred for tax purposes.
The fix is the question. Most customers never see it. Customers in the first-year-no-rental shape get a one-line banner and a one-click override. The minority of customers in genuine ambiguity get a Yes/No prompt. The data is then captured cleanly so the activation flow (when their first tenant moves in) has what it needs.
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