Companies

Your company or organisation might earn property income (if it rents out business or other premises, for example).

Separate rules apply to losses on property income. These losses:

• must be offset against other profits in the same accounting period
• cannot be carried back to be offset against profits from earlier accounting periods
• can be carried forward and offset against other profits in the next accounting period if it cannot be used in the same period and has not been used as group relief, as long as the property business is still being carried on in that accounting period.

If the company or organisation is a member of a group then losses on property income can be offset against profits of other members of the group if they arise in the same accounting period, but only if they’re more than the company’s own profits for the period.

Except in the limited circumstances in which they can be set against general income of the same year, property business losses can only be carried forward against losses of the same property business and can’t be carried forward to use against general income in any later year.

But property business losses can only be set off against profits from the same property business. They can’t be carried forward after the property business ceases.

Individuals

If the allowable expenses are greater than your rental income you will have made a loss. In general, you can only offset that loss against any profits that arise from the same rental business in future years.

If more than one property is being let out, the income and expenditure from all properties are combined to determine an overall profit or loss for the year.

This means that expenses incurred on one property can be offset against income from another. This also means that if there is a loss from one property it’s automatically offset against the profits from another.