Carrying forward losses for furnished holiday let

pauper79

Hi. My wife and I have a furnished holiday let which we renovated and furnished during Covid but only started renting in the last tax year. This means it effectively made losses for the 20-21 and 21-22 because we had no rental income but were spending money on it. I didn't declare those losses on my tax returns for those years, because it didn't occur to me to do so. But I note you are allowed to carry forward losses and there is a box on my 22-23 return to do this. Can I carry forward the loss if I haven't declared it in previous years? I am clear what is an allowable expense and what is not, but I just need to know if I can carry forward a previously undeclared loss. Thanks for any advice!

sheramber

Was the flat rented out before Covid or was last year the first year of renting it out?

Jeremy535897

You were correct not to declare anything in previous tax years, because until the property is first let, your property business does not begin. I am assuming that the answer to the question asked above is that this is the first time the flat will be let? Expenditure on bringing a property into a fit state to be let is capital, and not deductible from letting income. 

pauper79

Thanks, yes, first letting was 15 April last year although we were advertising it for several weeks before that, so not sure if that would trigger things in the previous tax year or not?

Jeremy535897

pauper79 said:

Thanks, yes, first letting was 15 April last year although we were advertising it for several weeks before that, so not sure if that would trigger things in the previous tax year or not?

No. See:
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2505

The costs of advertising might be pre "trading" expenditure.

pauper79

Thank you Jeremy, the link was incredibly helpful.