Chapter 12 Relief for other losses

Question 1

12.2 Losses of a UK Property business

Answer 1

UK property losses must be set against total profits in the current accounting period (total profits is before qualifying charitable donations). The relief is automatic. If there is excess property losses, this is carried forward and can be treated as a property loss in the next period, therefore being carried forward against future income and gains. This relief is not automatic and a claim must be made within 2 years of the end of the accounting period in which the loss is utilized. The claim is not an all or nothing claim. Brought forward property losses are included in the deductions allowance.

Question 2

12.3 Losses of an Overseas Property Business

Answer 2

Any loss is carried forward and set against profits of the overseas property business of future accounting periods. The carried forward losses of an overseas property business are not restricted.

Question 3

12.4 Loan Relationships – non trading deficits

Answer 3

Can be offset in the following ways:
• current year against any profits, before charitable donations, this is also not an all or nothing claim
• carried back against non-trade loan relationship income in the previous 12 months. For deficits incurred before April 2017, a carry claim is all or nothing. Deficits incurred after periods beginning on or after 1 April 2017 may be offset against non-trade loan relationship income of the previous 12 months up to any amount that does not exceed the available deficit.
• Carried forward against future profits. Deficits incurred in accounting periods beginning before 1 April 2017 my be carried forward against non-trade income and gains, this is automatic. Unrelieved deficits after 1 April 2017 may be carried forward against total profits of the next accounting period, relief is not automatic and the company has 2 years to make the claim from the end of the accounting period of the claim. This will be subject to the deductions allowance.
The company can carry back the loss of NTLRs without having to use the loss in the current year. NTLR deficits are used in priority to trading losses and losses of a UK property business.