Losses from a rental business can only be set against future profits if the business is a continuing business.
In some instances, it will not be clear as to whether a rental business has ceased as the activities may stop and then restart. HMRC apply a general ruling by which they regard the ‘old’ rental business as ceasing if there is a gap of at least three years between lets and different properties are let in the taxpayer’s old and new letting activities.
Thus, a rental business is not normally treated as having ceased simply because the property is not let for a period to allow for repairs or renovations.
However, the business may be treated as having ceased and then recommencing should the property be used as the taxpayer’s main residence between lets.
The losses of a ceased rental business cannot be set against the profits of a ‘new’ rental business.
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