What can an income tax payer do with property losses?

The following Tax practice note provides comprehensive and up to date legal information covering:

  • What can an income tax payer do with property losses?
  • Limited relief against general income
  • Applicable amount of the loss
  • Restrictions on relief—annual investment allowance
  • Restrictions on relief—tax-generated agricultural expenses
  • Restrictions on relief—cap on income tax relief for individuals
  • Carry forward property loss relief
  • Same property business
  • Post-cessation property relief
  • Qualifying payment
  • More...

What can an income tax payer do with property losses?

The charge to UK income tax applies to the profits of both a UK and overseas property business. A property business is one that generates income from land and includes every transaction entered into for that purpose.

Income tax payers include both:

  1. UK resident persons (ie individuals or trustees)—subject to income tax on the profits of both their UK and overseas property businesses, and

  2. non-UK resident persons (ie non-UK resident individuals or trustees or, prior to 6 April 2020, companies investing in property)—subject to income tax on the profits of their UK property businesses but not their overseas property businesses

For details of how the profits and losses of a UK or overseas property business are computed, see Practice Note: Property income—the income tax charge. Very broadly, property business losses may arise from an excess of interest and other property letting expenditure over rental income.

Property business losses do not include any capital losses arising upon sale of a property held as an investment.

Property business losses also do not include any losses arising from uncommercial letting of property (eg property let at a nominal rent to a relative or other connected party).

This Practice Note describes the relief available for losses arising to an income tax payer from their UK or overseas property business. Note that the relief available

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