Can some FHL losses still be offset against general income?

Can some FHL losses still be offset against...

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My client has made a loss in his FHL business for 2011/12. Although offsetting this loss against other income is no longer possible, I read that to the extent that the loss is attributable to capital allowances, that part can be set against other income? Is this true? Any conditions?

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By ireallyshouldknowthisbut
06th Jun 2012 16:53

Yes you can, the issue is generally very little actually qualifies for CA's in a FHL business unless its a big operation and you have computers/vans etc to chuck in.

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Replying to mr. mischief:
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By sparkler
06th Jun 2012 19:39

Does anyone have a link to HMRC guidance on this point?

I have asked in the past on AW for a list of items which would consitute capital purchases for a furnished holiday let, but without success. I queried it with HMRC, and they said that any item which was expected to last for longer than around 2 years could be considered to be a capital purchase (e.g. furniture etc) and of course allowances are also available for (where the property is newly built or renovated) installation of central heating systems, fitted kitchen, bathroom etc. 

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By sparkler
07th Jun 2012 16:10

I have telephoned HMRC to seek clarification over whether the capital allowance element of the loss can be set against general income and was told that it cannot.  The legislation quoted was ITA07/S127.

Would others agree with HMRC's interpretation?  It could make a big difference to the tax payable, and I want to make sure I use the right treatment!

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