During the Budget 2021, Chancellor Rishi Sunak introduced new legislation extending the period for which trading losses can be carried back against previous profits, from one year to three years.
Included in Finance Bill 2021, the extension allows businesses incurring losses between 1 April 2020 and 31 March 2022 to carry back these losses for up to three years, subject to a £2 million cap.
When first published, the draft bill included a reference to furnished holiday lets (FHLs), stating that FHL businesses were to be treated as trades. This caused confusion as to whether the extension would be available to FHLs.
This reference has now been withdrawn, confirming that FHLs will not qualify for the extended loss relief.
The position for FHLs remains the same as it has been in recent years, whereby losses incurred by an FHL business can only be carried forward to be offset against future profits from the same business. FHL losses cannot be offset against other income or carried back.
If you have any further queries on this amendment, please get in touch with our specialist team who will be happy to assist.
