Brought to you by
taxinsider

Tax Insider publishes monthly newsletters and reports.

Save content
Have you found this content useful? Use the button above to save it to your profile.

Tax Insider Tip: Losses Carried Forward

10th Apr 2015
Brought to you by
taxinsider

Tax Insider publishes monthly newsletters and reports.

Save content
Have you found this content useful? Use the button above to save it to your profile.

If there is an overall income tax loss made for a tax year, then unless the loss arises in relation to certain capital allowances, the loss is generally relieved as follows:

  • Carried forward and set against profits made in future years on properties in the same UK property business (or if overseas property, against the same overseas property business).
  • If the loss arises on or after cessation, relief may be set against the owners’ general income or against capital gains made, in certain circumstances.
  • Losses from UK furnished holiday lettings (FHLs) can only be carried forward and set against profits made on other UK FHL properties. When a property ceases to be an FHL, any unclaimed losses are wasted. Should the property be continued to be let, but as unfurnished, then the income and expenditure will be pooled with any other non-furnished lettings and taxed accordingly.

Example:
Ben owns a portfolio of four properties (none of which is an FHL). Together a loss was incurred for the year 2013/14 but a profit for the year 2014/15. His other income makes him a basic rate taxpayer.

Calculation:
2013/14   Loss carried forward     £(20,000)
2014/15   Profit                           £10,000  
Loss carried forward to 2015/16    £(10,000)
 
Nil tax due on lettings for either year 2013/14 or 2014/15.

This is a sample tip taken from our 136 page guide:
101 Ultimate Tax Strategies Revealed.

Click here to receive a free copy of this tax saving guide today!

Tags: