The new loss relief rules and property investors/traders

The PBR introduced a new three year carry back for up to £50,000 of trading losses. This means that certain losses can be carrried back for offset against other income in the last 3 tax years. The new loss relief rules only apply to trading losses. In terms of property businesses the main beneficiaries will be:

Property traders

Anyone running a furnished holiday lettings business So if you're buying and selling properties on a regular basis and can show that you acquired with the intention of reselling at a profit you could be classed as a property trader. Note though that the Revenue would inspect very closely any argument that you're a property trader in the year that losses are realised if you've never argued for trader status previously. Claiming trader status to benefit from the generous loss reliefs would not be accepted without strong evidence of a change in the nature of the activities. Furnished holiday lettings is deemed to be a trade for income tax purposes and therefore the new loss provisions would automatically apply allowing you to offset losses against employment income in the past 3 years if applicable. Anyone running a B&B, boarding house or other hotel could also benefit if they incur a loss, as this will be classed as a trading activity. Property investors won't qualify for the enhanced loss relief rules, at least not unless they also carry out a trading activity which incurs a loss. If that was the case they could offset the trading loss against other income including the rental income in the previous 3 years (subject to the £50,000 cap).