TC Renewal - Declaring a Loss on UK Property Income

JKS$( · 15 July 2019 at 4:53PM

I've had different answers from the helpline staff so thought I'd check here.

18/19 was the first year I rented out a flat that I bought with a BTL mortgage. I hope to sell my own home & move into it in a few years when my youngest has finished education.

I made a loss of just over £2000 which I've carried forward on my self assessment tax return. I discussed all my allowable expenses with a technical advisor at HMRC before submitting my return. There are no capital allowances.

I don't know how to account for this loss on my tax credits renewal form - can anyone help please?

My 'other income' comes from an occupational pension (I tool ill health retirement before state retirement age) & a very small amount from interest on savings. I claim CBESA (accounted for already on TC renewal form) & PIP (ignored for TC purposes)

Thanks in advance.

WhenIam64 · 15 July 2019 at 6:06PM

AFAIK property loss is not an allowable offset for income. The presumption is that it will be carried over as a property expense until you reach a profit on property transactions.

Dazed_and_confused · 15 July 2019 at 6:36PM

As you have finance costs the loss for Self Assessment is likely to be different (smaller) than the loss for tax credit purposes.

I think tax credits still benefits from being able to claim loan interest as an expense whereas with Self Assessment this is restricted.

But all that will give you is a bigger loss for tax credit purposes. This may well mean your rental income is still zero for tax credit purposes.

sheramber · 15 July 2019 at 6:58PM

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/784108/TC825_04_19.PDF.pdf

Losses on property income

Normally, the loss should be carried forward and offset against profits from the same income source in the following tax year. Since 6 April 2011, the same rule has applied to furnished holiday lettings. If part of the loss comes from capital allowances or agricultural land, that part of the loss may be offset against other income which you (but not your spouse or partner) may have, either in the tax year in which the loss was made or in the following tax year. In these cases, the amount of loss relief available for tax credits purposes is based on your tax calculations. Read ‘Example 1’ opposite. [/I]

JKS$( · 16 July 2019 at 7:58PM

sheramber wrote: »

...

Losses on property income

Normally, the loss should be carried forward and offset against profits from the same income source in the following tax year. Since 6 April 2011, the same rule has applied to furnished holiday lettings. If part of the loss comes from capital allowances or agricultural land, that part of the loss may be offset against other income which you (but not your spouse or partner) may have, either in the tax year in which the loss was made or in the following tax year. In these cases, the amount of loss relief available for tax credits purposes is based on your tax calculations. Read ‘Example 1’ opposite. [/I]

Thank you - the way I'm interpreting this is that for TC purposes my loss doesn't matter & I don't need to tell them about if on the form. My situation isn't the same as the example they give as I've no capital allowances or balancing charges.

My 'other income' figure will therefore be my occupational pension & interest on savings, just as it was before I started renting my flat. Does that sound correct?

JKS$( · 20 July 2019 at 2:46PM

When I finally got around to renewing my TC online the question of income from UK property was dealt with easily -
1. Did you get income from renting property? Y on N
2. Did you make a profit? Y on N
3. Was the loss from allowable expenses? Y or N

(I doubt I've got the wording correct but that's the gist of it)

So all straightforward in my case

Obviously my case won't be the same as everyones but I would have found it much more helpful had the paperwork said something similar. Glad to have got it all sorted & thanks to everyone who helped.

TC Renewal - Declaring a Loss on UK Property Income

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