Holiday let landlords unable to carry back losses
The current Finance Bill was published on 11 March 2021. However, some changes have been made during its passage through Parliament. Why is one subtle change bad news for owners of furnished holiday lets?
Budget 2021 included the announcement that there will be a temporary extension to loss relief for self-employed traders. The extension allows losses from 2020/21 and 2021/22 to be carried back against profits of the same trade from the previous three tax years. One of the conditions for using the extension is that the taxpayer must have made a sideways relief claim under s.64 Income Tax Act 2007 first, or have a loss that would be eligible for s.64 if there were profits to offset.
Initially, the Finance Bill included a clause saying that furnished holiday letting (FHL) businesses were to be treated as eligible for the extension. However, this was confusing as FHL losses are not eligible for s.64. It seems that the government has realised this because the clause has now been deleted. Unfortunately, FHL owners who will undoubtedly have been hit had by the recent lockdowns will not be able to carry back losses against previous profits.
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