Revenue Note for Guidance

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Revenue Note for Guidance

384 Relief under Case V for losses


This section provides for the carry forward of any unrelieved rental losses sustained in a year of assessment for set-off against Case V income arising in a subsequent year of assessment. Capital allowances arising in a particular year that are attributable to rental property must be used in priority to rental income losses being brought forward from earlier years. Section 75(4) ensures that any losses sustained from the uneconomic letting of any premises are excluded from relief under this section.


Loss relief

(1) & (2) Where in any year of assessment the sum of the deficiencies arising to any person from each rent or from the total receipts from easements exceed the total of the surpluses so arising, the excess may be carried forward and set against the person’s Case V income for a subsequent year. Any income tax overpaid is to be repaid. The deficiencies and surpluses referred to are to be computed in accordance with the Case V computational rules contained in section 97.

Adjustment of losses on clawback of section 23-type relief

(2A) Where a clawback of section 23-type relief occurs, the amount of any deficiencies which are carried forward into that year is then reduced by an amount equal to B in the formula in section 372AP(7). This is because the deemed amount of income in that year has already been reduced by that amount and without this reduction, that amount could be deducted twice.

Order of relief

(3) Subject to subsection (4), the relief given by the section is to be given, as far as possible, from the Case V assessment for the year immediately following the year in which the Case V loss arises. Any balance of relief is given from the next such assessment and so on.

(4) Current year capital allowances that are made in charging income under Case V as provided for in section 305 must be used in priority to relief under this section for unused Case V losses from earlier years.

Relevant Date: Finance Act 2021