Property business losses

By Tolley

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

  • Property business losses
  • Calculating a loss
  • Normal rules
  • Property business losses set against general income
  • Cap on unlimited income tax reliefs

For income tax purposes, rental profits from land and buildings are categorised as either:

  • a UK property business, or
  • an overseas property business, see the Overseas property businesses guidance note

England, Wales, Scotland and Northern Ireland make up the countries of the UK. The Isle of Man and the Channel Islands are treated as overseas for the purposes of the legislation.

This means that UK rental profits are pooled together and reported as one business, and overseas rental profits are pooled together and reported as one business.

The exceptions to this are:

  • furnished holiday lettings which are calculated and reported separately, see the Furnished holiday lets guidance note
  • properties let at an uncommercial rent, as the expenses are limited to the amount of the rent, see the Allowable property expenses guidance note

UK property businesses are considered further in the Property income guidance note.

This guidance note refers to a UK property business, but the rules apply equally to an overseas property business. Different rules apply to losses from furnished holiday let businesses, see the Furnished holiday lets guidance note.

Calculating a loss

Property business losses are calculated in the same way as property business profits.

From 2017/18 onwards, there are two possible bases that can be used to calculate property business profits and losses:

  • the simplified cash basis, which is the default basis for calculating profits and losses, unless certain conditions are met, see the Simplified cash basis for unincorporated property businesses guidance note
  • the

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