The profits and losses of a property business (see B6.201) are computed in accordance with the rules for trading income1 (see B6.202). However, the profits of a property business are treated as investment income so that the reliefs in respect of trading losses do not apply to losses of a property business (referred to as property business losses). Relief for such losses is given in accordance with the legislation described below.
UK property business
A UK property business is treated as a separate business from an overseas property business, and although the loss relief provisions are identical, the losses are calculated and allowed separately2.
Relief for losses may be given in one of three ways:
• by carry forward for deduction from profits in subsequent tax years (see below)
• by deduction from general income in certain circumstances (see below), or
• by deduction from general income or treatment as a capital loss for certain post-cessation payments and events in connection with a UK property business (see B6.213)
For HMRC guidance see PIM4200 onwards.
Note however that a loss in a UK property business can be set against a profit in a UK furnished holiday letting (UK FHL) business3. This is because a UK FHL is part of a UK property business. By contrast UK FHL losses cannot be set against profits from a UK property business, see B6.405.
For details of relief for post-cessation property expenditure and unrelieved losses see B6.213.
In Azam4 the Tribunal was not satisfied that