Loss Relief with FHL-Before and After

If a taxpayer makes a loss on furnished holiday lettings, he could take advantage of a special relief called Loss Relief.
The way to get this relief is to offset your furnished holiday lettings losses against any other type of income (employment, self employment etc) and so you can immediate take advantage of the relief.
Taxpayers can claim to set their furnished holiday lettings losses against their other general income for either the tax year in which the loss was made or the year before the year the loss arose.Of course another option is to carry the loss forward and offset it against future letting profits. This option is available not only for holiday lets but also for residential ones.

As from 2010-11 tax year , the Furnished Holiday Lettings (FHL) rules will be repealed. Among the changes to take place from 2010-11 is the one related to the Loss Relief.

As a result of this change no loss relief will be available to offset against other type of income from 2010/2011. Only option is to carry forward the loss and offset it against same type of income when a profit is made as with any normal residential lettings case.

Another important change worth mentioning is the fact that "HMRC will now treat the FHL rules as including furnished holiday accommodation elsewhere in the EEA."

That being said you can amend your already submitted tax returns to HMRC so you can take advantage of the reliefs previously only available for FHL in the UK.

You can amend your income tax and capital gains tax returns for the year ended on 5th April 2007 until the end of July this month.The same deadline applies to corporation tax returns for accounting periods ending on or after 31 December 2006. If you want to amend your return for 07/08 tax year then you need to do it by 31/01/2010.

If there is still confusion in relation to loss relief with FHL or the rules to be repealed from 2010/2011 you can visit HMRC website or ask Taxfile's tax accountants for more details.