Question:
I have a property in Cyprus which is available for rent all year and is rented on average about 15 to 20 weeks per year. I have been claiming back my losses on my UK tax paid. Is this still possible for 2010/11 and going forward into 2011/12?
Arthur Weller Replies:
In 2004 Cyprus joined the EU. All the members of the EU are members of the European Economic Area (EEA). Not so long ago HMRC agreed that the rule that losses from furnished holiday lettings (FHL) can be set against general income in that tax year (like regular trading losses) applies not only if the FHL is situated in the UK but even if it is situated anywhere in the EEA.
However, in the March 2011 Budget, the Chancellor announced that from 6 April 2011 (for individuals) losses from FHLs (situated anywhere) will not be allowed to be offset against general income but only against income from the same FHL business.
