»Ê¹ÚÌåÓýapp

Where a taxpayer has opted to tax a building which consists of both commercial and domestic accommodation, such as a pub or shop with living accommodation above, the option to tax will disapply on the part being used as a dwelling. »Ê¹ÚÌåÓýapp taxpayer must apportion the rental income/sale proceeds between the standard rated commercial element and the residential element

»Ê¹ÚÌåÓýapp residential part will generally be exempt, unless the grant qualifies as a zero rated first grant of a major interest in a new dwelling. In relation to pubs it is the normal industry practice to treat 10% of the value as relating to the supply of domestic accommodation. Such treatment has been accepted by HMRC (though no formal agreement exists). »Ê¹ÚÌåÓýappre will be exceptions to this, most notably where pubs are operated on a lock-up basis or where the 90/10 split is clearly inappropriate. Similarly, the sale of a farm will normally have to be apportioned between the exempt farmhouse used as a dwelling and the standard-rated farmland and farm buildings.

If the part of the building designed for domestic use is intended to be used for business purposes, such as a flat over a shop which is to be used exclusively as a storeroom or office, the whole supply is standard rated.