Letting losses and UK Furnished Holiday Lets

What options do I have............?

Didn't find your answer?

I have a client who has 'normal' letting losses in the year as well as accumulated losses brought forward from earlier years.

In 17/18 he also has a UK FHL which has made a profit.

Two questions:

1) Can I use the brought forward 'normal' lettting losses against the UK FHL profit?

2) Can I use the 'normal' letting loss in the year, sideways against the UK FHL profit?

Tried, and failed, to find the answer......!

Thanks in advance.

Replies (6)

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By frankfx
30th Nov 2018 11:28

Where did you look to find the answer?

Tolleys ?

CCH?

HMRC?

Just so that any awebbers who start investing time looking , avoid places where you have been and failed.

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By grahambonds
30th Nov 2018 12:10

Are the normal letting losses from a UK or Overseas property business?

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By Adam12345
30th Nov 2018 12:19

1) no

2) no

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Replying to Adam12345:
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By Vile Nortin Naipaan
30th Nov 2018 13:54

Actually, assuming that the non-FHL(s) and the FHL(s) are part of the same (UK or non-UK, and in the same capacity) property business, HMRC's answers are:
1) yes, and
2) yes.

You can set b/f non-FHL losses off against future FHL profits within the same property business and sideways relieve non-FHL losses against FHL profits within the same property business, according to HMRC. They say you can't do it the other way around though, which is what's daft.

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Replying to Vile Nortin Naipaan:
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By Adam12345
30th Nov 2018 16:57

s.118 ITA 2007?

Non-FHL property income is not treated as the same property business as FHL property income - s.127 ITA 2007.

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By tonycourt
02nd Dec 2018 22:59

Property rental businesses and a UK FHL businesses are separate businesses for tax purposes and losses from one type of business cannot be used against profits of the other except and to the extent that they result from capital allowances.

However, if in a year the FHL rules do not apply to a property its profits and losses form part of the general property rental business and therefore the brought forward losses must be used in accordance with s.119 ITA 2007, i.e losses and profits from each property must be aggregated.

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