Property losses- do I need a tax return?

I have a Buy to Let property, but because of the size of the mortgage, I do not make any profit from it. I am employed and have never submitted a tax return before- do I need to now?

16th August 2018

Although you have no income to tax from your property, you would probably benefit from documenting the losses by submitting a tax return. Having a clear record of the losses will allow you to carry forward the losses and offset them against future profits you make from the property.

Please note, you are obliged to submit a tax return if your gross rents (i.e. the income from the property before deducting any expenses) are over £10,000 per annum or if your profits are over £2,500 per annum (i.e. after expenses have been deducted). This is irrespective of whether the property is profitable or not.

Unfortunately, you cannot offset rental losses against other income. If you had any other rental properties, they may be regarded as one rental ‘business activity’ and therefore this loss would automatically be offset against the profits of the other rental properties.

Property losses may only be offset against future profits from the same rental business activity. If you purchase another rental property later on, you may not be able to offset the loss against these profits if there is a large gap between when you owned each of the properties.

If you would like some assistance in registering with HMRC and completing your tax return, please feel free to get in touch with your local TaxAssist Accountant.


By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Call us today to make an appointment at your local office

0800 0523 555

Or submit an enquiry