Can I offset rental losses against other income?
In short the answer is no, you cannot offset rental losses against other income to reduce your tax bill.
HMRC considers income from property as investment rather than trade so it’s not treated in the same way as a trading loss.
This means you’re not allowed to offset a rental loss against your tax bill from other sources of income (such as dividends or pension income) or any capital gains.
Losses from rental properties can be carried forward to set against future profits from your UK property business.
Reviewed by Tony Shanks, Operations Director Tax Rebate Services and member of Association of Tax Technicians (ATT)