Last updated: 14 October 2026
Can you set losses against profits from letting other properties?
Yes, within the same property business. All of your UK rental properties (other than any let through a company) form one UK property business, so a loss on one property is automatically set against profits on the others in the same tax year. If the business as a whole makes a loss, it’s carried forward and set against future UK property profits. Rental losses can’t usually be set against your salary or other income.
How rental losses work
| Situation | What happens |
| Loss on one UK property, profit on another | Automatically netted off in the same year |
| Overall UK property loss | Carried forward against future UK property profits |
| UK and overseas property | Separate businesses; losses can’t be mixed |
| Loss from letting to family below market rent | May not be allowable |
| Loss caused by capital allowances (on commercial property) | Can sometimes be set against other income |
| Company-owned property | Losses stay in the company |
Carrying losses forward
- Losses are carried forward automatically to the next year’s property profits
- They must be used as soon as possible, against the first available profits
- There’s no time limit while the property business continues
- If you stop letting entirely and later start again, old losses may be lost
Mortgage interest
Mortgage interest for residential lets isn’t deducted from rental profit. Instead, you get a 20% tax credit. Unused interest can be carried forward to later years, separately from losses.
Example
Kate owns three buy-to-let flats. In 2026/27, Flat A makes £6,000 profit, Flat B makes £2,000 profit, and Flat C makes a £10,000 loss due to a major repair. Her overall UK property business has a £2,000 loss, which is carried forward. In 2027/28, her property profit is £9,000, so she’s taxed on £7,000.
Former holiday lets
Since the furnished holiday lettings regime ended in April 2025, any unused FHL losses can be carried forward against profits of the wider UK property business.
Jointly owned properties
Each owner calculates their share of profits and losses, which forms part of their own property business.
Reporting losses
Even if you have a loss, you should file a Self Assessment return to record it. HMRC can only carry forward losses it knows about.
Making Tax Digital
From April 2026, landlords with qualifying income over £50,000 must keep digital records and submit quarterly updates. Losses carried forward are dealt with in the final declaration.
Common mistakes
- Treating each property as a separate business and carrying forward losses on one while paying tax on another
- Mixing UK and overseas rental losses
- Not filing a return in a loss year, so the loss is never recorded
- Claiming improvements as repairs to create a loss
Keep a running record of losses brought forward so you can check that HMRC’s calculation matches your own each year.
Frequently asked questions
Can I offset rental losses against my salary?
No, except losses from capital allowances or agricultural expenses.
Can I choose which year to use a loss?
No, it must be used against the next available profit.
Do losses transfer to my spouse?
No.
Are repairs or improvements more likely to create a loss?
Only repairs are deductible; improvements are capital.
Related: declaring rental income with no profit, mortgage interest on let properties and jointly owned rental income.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with rental losses and landlord tax. See our landlord accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
