Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Property Income Manual

From
HM Revenue & Customs
Updated
, see all updates

Losses: overview (IT)

Rental business losses are calculated in the same way as rental business profits. The main method of relieving a loss in practice is to carry it forward and deduct it from future rental business profits - see PIM4210.

Where carry forward loss relief is due the taxpayer must use it in full against the first available rental business profits. They can’t opt to take a smaller amount.

There are three other methods of relieving losses but they are not available in all cases. The three other methods are:

  • relief against general income to the extent the loss is due to certain capital allowances (see PIM4220),
  • sideways relief against general income to the extent the loss is due to certain agricultural expenses (see PIM4220),
  • sideways relief against general income to the extent the loss is due to furnished holiday lettings. The last year that this relief is available is 2010-2011) (see PIM4130).

Where a taxpayer claims sideways loss relief, they must take the full amount of the loss available up to the amount of their general income. They can’t opt to take a smaller amount - either they claim for the full loss or they claim for none.

All the loss relief rules apply where the loss arises from ordinary commercial letting. Expenses of properties that are let on uncommercial terms (for example, at a nominal rent to a relative) can only be deducted up to the amount of the rent or other receipts generated by the uncommercially let property. The excess of the expenses over the receipts from the uncommercially let property can’t be deducted in the rental business and can’t, therefore, create a loss (PIM2220).

Losses made in one rental business can’t be carried across to any other rental business the taxpayer carries on at the same time in a different legal capacity (see PIM1020).

For details of post-cessation property relief see PIM2510.

CT Schedule A losses are dealt with at PIM4230.