TQOTW: Company Rental Losses
My client is a trading company and due to trading difficulties in the current year, they have made a loss in their trade, which they will carry back to the profitable previous year. They also have a rental property in the company that also made a loss, can they carry that loss back against the profits of the trade in the previous year too? If not, how else can they relieve the rental loss?

The short answer is they cannot carry back the rental loss. The rules for the use of corporate rental losses are found in s62 CTA2010 s.62. This covers loss relief in the current year and states the unused loss is carried forward and treated as a rental loss for the following period, providing the rental business continues. There is no provision to carry it back to previous accounting periods.

Therefore, as there is no profit in the current year to relieve, and the company is not part of a group, the loss is simply carried forward.

The loss can be carried forward and, subject to a claim being made, offset against the total profits including gains of the company in subsequent accounting periods – providing the rental business continues.

If there is a rental loss in the next period, it will be relieved against the total profits including gains of the company in that period, but any brought forward loss requires a claim.

A claim for relief for the carried forward loss to be offset against total profits needs to be made within 2 years of the end of the period where relief is claimed – s62(5C).

For the practicalities of obtaining relief, see the notes re boxes 190 and 250 in HMRC’s Guide to completing a CT Return and HMRC’s comments at PIM4236.

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Alec has worked at Croner Taxwise since 2014. He has successfully completed his IR35 training and undertakes contract reviews. Alec gained his tax knowledge whilst working in the consultancy department of Croner Taxwise and he is currently working towards the ATT qualification.

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