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Rental Losses

SarahSSarahS Feels At HomeRegistered Posts: 60

I have a new client who according to their records have accumulated rental losses (one property) of £12,466. However, according to last year's tax return the loss for the year was £2,000 and the accumulated losses carried forward were also £2,000. Can anyone explain this?

My understanding of the general rule is that any rental loss is automatically carried forward and set off against rental business profits of the following year and they can’t be set off against any of the taxpayer’s other income. Therefore, losses will carry forward indefinitely until relief can be given against rental profits so can anyone think of an explanation as to why only one year's loss is carried forward.



  • Anne BoleynAnne Boleyn Well-Known Registered Posts: 196
    Rental losses

    Hi Sarah

    Did they have accounts prepared? What do their records consist of? Is it just a property that they rent out or a holiday let?

    It might just have been an oversight on the accountants part to not include the brought forward losses. Not acceptable but mistakes do happen.

    Holiday lets are treated differently (until next year, I believe) but I think they are treated as trading profits/losses and therefore losses can be offset against other income.

    If you could post a little more information others may be able to help you further.

  • SarahSSarahS Feels At Home Registered Posts: 60

    It's not a holiday let - it's a rented out house. You're right, holiday lets are different and other treatment of the losses applies.

    Accounts have been properly prepared by firms of accountants for many years since owning the property. They have changed accountants a few times - lossess were initially bought forward but when they changed accountant they weren't and only losses for the year were shown. I'm thinking it was an oversight by the accountants. They then changed accountant again and likewise, only losses for the year were shown. Another oversight I think as I do not know of any reason why they wouldn't be carried forward.

  • GuestGuest Feels At Home Registered Posts: 73
    I assume that you are now completing a return for 31 Jan, I would prepare showing losses b/d as supplied and request copies of all SA100s from HMRC and follow the previous years through. If an amendment is required (if losses are higher) this can be done at a later date.

    I’ve seen losses off-set against other income in the past with new clients. If this is the case you will have another dilemma to consider!
  • mc25mc25 Well-Known Registered Posts: 232
    For those who have info on holiday lets, please can you send me a link where i can read more about it, I am interested to know deeper how it works.

  • Anne BoleynAnne Boleyn Well-Known Registered Posts: 196
  • mc25mc25 Well-Known Registered Posts: 232


    thanks for that.

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