Many farms and landed estates include cottages which are let as furnished holiday accommodation. In the unpredictable British summer, such lettings can frequently turn a loss rather than a profit.
If you make a loss from your farm, that loss can be set against your other income in the same or the previous tax year, as long as the farm is run on a commercial basis. The use of farming losses against other income may be blocked if you don’t make a profit from the farm every six years.
When you make a loss from your holiday cottages the law is not so flexible. That loss can’t be set against your other income, such as from farming, even if the cottages are on the same farm. The holiday accommodation loss must be carried forward to set against future profits from the same holiday lettings business.
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