Can someone just clarify I am right please

Sarah-Lou Registered Posts: 141 🎆 🐘 🎆
I have a client who used to have a business, business folded, she still has business debts which she is paying off.

She seems to think she can take these debts off her 'profit' from her property she rents out? I didn't think she could as it is a separate entity?

Thank you



  • PGM
    PGM Registered Posts: 1,954
    I'm assuming none of them are Ltd?

    Normally on your self assessment you'd be able to offset profits against losses, but, with rental property you can only offset losses against profits of the same trade. An obvious loop hole which they closed!
  • JodieR
    JodieR Registered Posts: 1,002
    I just posted a reply but it vanished... apologies if it duplicates now!

    What is the nature of the replayments which she's making? If they are to suppliers for goods/services received then the costs should already have been accounted for on her final accounts and she would therefore already have had tax relief for them.

    If she's still paying off a bank loan then it's really only the interest which she's loosing tax relief on, not the entire payment. As the business is no longer trading and I assume the loan(s) had nothing to do with the property she owns then no, there's no way to claim the bank interest.

  • Sarah-Lou
    Sarah-Lou Registered Posts: 141 🎆 🐘 🎆
    Thank you!

    She has various pieces of equipment she is paying for and wants to offset however she is not trading in anyway. She insists 'my old accountant' did it for me, hmm yes lets not go there!

    Thanks for your help :)

  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    Agree with Jodie, if she's not trading, I can't see any way of claiming a deduction unless she can bring the equipment into the rental business?!?!?
  • PGM
    PGM Registered Posts: 1,954
    I agree with everyone.

    I quickly found out these rules when I started renting a house out several years ago. But I carried the losses forward and eventually used them against other rental profit.
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