# Rental Income - treatment of unused losses & capital allowances from previous year



## Booter (8 Oct 2012)

Hopefully someone can nail this one down for me. Despite some advice already, I've not really got it absolutely clear in my head. 

I made a net loss on rental income in 2011, and therefore my tax liability on this income is ZERO, without utilising any (1) losses forward, or any (2) capital allowances.  I do have both (1) & (2) available to call on.

I'm therefore unsure what to do about (1) & (2), given that I don't need them as such for now. Do I mention them on the Form 12 at all? If not, can I use them some other year when I might need them to offset a liability?

Thanks


----------



## smeharg (8 Oct 2012)

Do you mean you've losses forward and unused capital allowances from 2010?

There are specific boxes for these on Form 12:

"Capital Allowances brought forward from a prior year"

and

"Losses -Amount of unused losses from a prior year"


----------



## Booter (8 Oct 2012)

smeharg said:


> Do you mean you've losses forward and unused capital allowances from 2010?
> 
> There are specific boxes for these on Form 12:
> 
> ...



Smeharg, 

Thanks for your reply. Yes, to clarify, I have both available to use from a prior year, however neither will make a material difference to the tax liability, which is already Zero. So do I go ahead and include them, thereby increasing the "2011 loss" - which I can then carry forward again the next year?


----------



## mandelbrot (8 Oct 2012)

I'm looking at Part 15 of the Form 12 and I'm not sure what your difficulty is - there is clearly identified panels for you to complete the information you're asking about.


*Net 
*Rental Loss (*after *expenses *but before *Capital Allowances) - you say you know this figure.

Capital Allowances brought forward from a prior year - you should know this figure​ 
Capital/Balancing Allowances for the year 2011 - you should also know this figure​ 
Capital Allowances used against rental income in the year 2011 - this will be Nil if you have a Net Loss on the top line.​ 
Capital Allowances available for carry forward or offset - this will be the sum of the 2nd & 3rd lines (minus the Nil from the 4th line).​ 
Excess Case V Capital Allowances - irrelevant unless your Cap All's relate to an Industrial Building

skip 2 lines... (also irrelevant)

Losses - Amount of unused losses from a prior year - you should know this figure
​


----------



## mandelbrot (8 Oct 2012)

Booter said:


> So do I go ahead and include them, thereby increasing the "2011 loss" - which I can then carry forward again the next year?


 
These amounts do not increase the 2011 loss. It is what it is, and if anything, it increases the amount of the "unused losses from prior years" figure carrying forward to next year!


----------



## smeharg (8 Oct 2012)

Booter said:


> Smeharg,
> 
> Thanks for your reply. Yes, to clarify, I have both available to use from a prior year, however neither will make a material difference to the tax liability, which is already Zero. So do I go ahead and include them, thereby increasing the "2011 loss" - which I can then carry forward again the next year?


 
As Mandlebrot points out all the boxes are all clearly labeled on form 12, so I can't see what the difficulty is.

There is nowhere to add the losses forward to the current year loss.  The current losses and losses forward are quite clearly separately identified on the form.  Come next year your losses forward will be 2011 and previous years' losses added together.


----------



## Booter (10 Oct 2012)

Smeharg & Mandlebrot, 

I probably haven't made myself clear enough, but I think both your replies have clarified one part of my question, in that I now see that my losses from previous years simply accumulate and each year I enter the new cumulative figure.

The other part of my question which relates to the capital allowances - I do not need to utilise any of this, and therefore will enter "nil" as suggested. My understanding is that these need to used within 8 years, or else they are no longer applicable is that correct?


----------



## mandelbrot (11 Oct 2012)

Booter said:


> Smeharg & Mandlebrot,
> 
> I probably haven't made myself clear enough, but I think both your replies have clarified one part of my question, in that I now see that my losses from previous years simply accumulate and each year I enter the new cumulative figure.
> 
> The other part of my question which relates to the capital allowances - I do not need to utilise any of this, and therefore will enter "nil" as suggested. My understanding is that these need to used within 8 years, or else they are no longer applicable is that correct?


 
No the 8 years has got nothing to do with how long the capital allowances can be carried forward - they carry forward indefinitely to be used against future income.

The 8 years is the taxable life of the ASSET - i.e. the annual wear & tear allowance is 1/8 of the cost, so after 8 years the asset has been reduced to nil value for tax purposes - the same as depreciation for accounts. Whether or not you have ever actually used these allowances to reduce taxable income is irrelevant. You could end up carrying all 8 years' capital allowances forward in year 9.


----------



## rodger (13 Oct 2012)

*treatment of unused losses*

Guys

As per the original poster I would like to understand what happens to the losses carried forward 

For example if I have accumulated losses of 20,000

And for the next 4 years I make a profit of 5,000 

Does that mean zero liability for the next 4 years?

Can the losses accumulate indefinitely eg 20 years ?

Also I'm not clear on the capital allowances 
I thought these were over a finite time span eg 5 years or say 8 years
And after that period of time they no longer apply 

Thanks


----------



## mandelbrot (14 Oct 2012)

rodger said:


> Guys
> 
> As per the original poster I would like to understand what happens to the losses carried forward
> 
> ...



Everything you want to know has already been answered as concisely as possible above, I can't see how you could be unclear.

I've explained it as clearly as I can so it's someone else's turn I think...!


----------



## norejon (15 May 2013)

does anyone know where in form 11 online you put the brought forward losses


----------



## rodger (13 Oct 2014)

Folks

It seems that I will be carrying forward losses for a long long time.

Maybe 20 years. But that might be useful in 20 years when I am retired.

So can any confirm there is no limit on losses carried forward? 

It would be disappointing to learn otherwise in 20 years time.


----------



## Branz (13 Oct 2014)

rodger said:


> Folks
> 
> It seems that I will be carrying forward losses for a long long time.
> 
> ...



As the tax laws of the land stand at present there is no limit.

However that may well change over the next 20 years


----------

