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HMRC internal manual

Property Income Manual

Losses: overview

ITA07/Chapter 4 Part 4

Where a property business makes a loss, there are generally two ways in which these can be relieved:

  • carry-forward against future profits (PIM4210), or

  • set against general income (PIM4220).

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

For details of post-cessation property relief see PIM2510.

For guidance relating to the corporation tax treatment of losses arising in a property business carried on by a company, see PIM4230 onwards.

Uncommercial losses

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 (PIM2130).