Tax relief on losses – for landlords – The Financial Resilience Hub

If you’re a landlord and you make a loss on your property rental business, your options for using that loss depend on whether you’re running an unincorporated or a company business. We’ll look at both cases in this blog post.

Tax relief on losses for unincorporated landlords

If you have an unincorporated property business, a loss incurred in one property rental business can be carried forward and set against the first available profits of the same property rental business. The relief is given automatically and there is no need to make a claim.

📢❕If you have both a residential let and a furnished holiday let, these are currently seen as two separate businesses. From 6 April 2025, though, this will change – see The end of furnished holiday lettings advantages for more on this.

What if you have more than one property?

Where an unincorporated landlord has more than one property, so long as the lets are of the same type, the losses from one let can be offset against the profits from another. In this way, you arrive at a combined profit or loss for the business in a particular year. There is no need to consider each property separately.

📢❕Currently, if you have more than one property rental business, the losses made in one of those businesses can’t be set against the profits of another. For example, a loss in 2023-24 on a Furnished Holiday Let (FHL) business cannot be set against a profit in 2023-24 on a separate property rental business. From 6 April 2025, though, this will change (see The end of furnished holiday lettings advantages).

Closing your property business or pausing the lets?

If a property business ceases, relief for unused losses is lost, even if the landlord starts up a new rental business in the future.

📢❕Care must be taken if there is a pause in letting if there are unused losses. Loss relief will only be available after the pause in the same business – not in a new business.

👉Example: An unincorporated landlord’s property loss – 1 property

Peter lets out a property on a long-term residential let. In 2023-24, he makes a loss of £1,200. In 2024-25, he makes a profit of £4,600.

The loss of £1,200 from 2023-24 is carried forward and set against the profit of his property rental business for 2024-25 (£4,600), reducing the taxable profit for that year to £3,400.

👉Example: An unincorporated landlord’s property loss – 2+ properties

Jane lets out three properties. The properties comprise a single property rental business. In 2024-25 she makes a loss of £6,000 on one property, a profit of £4,300 on the second property and a profit of £7,100 on the third property. Her profit for the business as a whole is £5,400. The loss on property 1 is automatically offset against the profits on properties 2 and 3.

Tax relief on losses for corporate landlords

Where the property business is dealt with through a company, any losses must first be set against the company’s total profits for the accounting period. Thereafter, it must be carried forward and set against the future total profits of the same company. Any unrelieved losses at the date of cessation are lost. If you have two or more separate companies, you can’t transfer your losses from one to another. (It would be good if you could!😉)

📢❕The information in this blog post was correct at the time of writing. Please check with your accountant for the latest information or, if you don’t have an accountant, join the Financial Resilience Hub to get access to one of ours! Alternatively, keep an eye on HMRC’s website for updates.