Property business losses

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Property business losses
  • Relief for property business loss
  • Investment companies
  • Anti-avoidance rules on carried forward property losses
  • Rules for ascertaining change of ownership
  • Significant increase in company’s capital
  • Anti-avoidance: tax loss refresh rules
  • TAAR
  • Further anti-avoidance provisions post-1 April 2017

Relief for property business loss

UK property business losses are deducted from total profits (if any) in the period in which the loss is incurred.

From 1 April 2017, any UK property business loss that has not been deducted in the current period and has not been relieved under the group relief provisions of CTA 2010, Parts 5 or 5A may be relieved against total profits in a later accounting period upon the making of a claim for all or part of the loss. The claim must be made within two years of the end of that later accounting period, or such longer period as HMRC allows. Relief will be denied if the UK property business does not continue to carry on that business in that period.

CTA 2010, s 62

This increased flexibility could be used to the company’s advantage to preserve double tax relief or charitable donations that would otherwise have been lost under the earlier rules. This aspect of the post-1 April 2017 regime is examined in Example 1, along with a comparison of the earlier rules.

HMRC issued new guidance on 19 January 2018 for agents and advisers covering property income losses . Capital losses and terminal losses are also dealt with in the same document.

Any excess UK property business losses carried forward which arose before 1 April 2017 were automatically deducted from total profits of the next accounting period, provided they had not been relieved under the group relief provisions of CTA 2010, Part 5.

Relief for overseas property business losses can be used only against future profits of that overseas property business.

CTA 2010, s 66

In order for the property loss to be relieved, it must relate to a property business carried on either on a commercial basis, or in the exercise of a statutory function.

CTA 2010,

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