Chapter 11 Relief for other losses

Question 1

11.1 Other losses

Answer 1

Other losses include losses from a UK property business and an overseas property business and losses from non-trading loan relationships.

Question 2

11.2 Losses of a UK property business

Answer 2

All the results of the UK properties are pooled together. If the pool represents a profit this is taxed as property business income. If the pool represents a loss, relief is available. The losses must be set against total profits in the current accounting period. No claim is required as this is automatic.
The relief is given in priority to any trading losses of that year. If any excess remains this is carried forward and may be treated as a UK property business loss of the next period and can be carried forward against future income and gains of any description. A claim must be made within 2 years of the end of the accounting period in which the loss is utilized for this to occur.

Question 3

11.3 Losses of an Overseas Property Business

Answer 3

Overseas property losses are also pooled together, a loss is carried forward and set against profits of the overseas property business in future accounting periods. Unlike UK property losses, the carried forward losses of an overseas property business are not restricted by the deductions allowance.

Question 4

11.4 Loan relationships

Answer 4

If a deficit arises it can be relieved in the following ways:
• Offset in the current year against any profits of any kind before charitable donations up to any amount not exceeding the available deficit
• Carried back against non-trade loan relationship income in the previous 12 months. For deficits before 1 April 2017 a carry back claim is all or nothing
• Carried forward against future gains – deficits before April 17 can be carried forward against non-trade income and gains and this is automatic. Deficits post April 17 can be carried forward against total profits and a claim is needed