FHL losses and future CGT

I have been posed this question today from a Ltd co "we currently operate an FHL business however we are a low profit making company. If i claim capital allowances i will increase that loss. If we sell the property in the future we will generate a gain. Can i use the loss generated from the CA claim to decrease the capital gain, especially in light of the new FHL legislation?"

Hi,
HMRC cannot xcomment on future events as legislation and/or plans may change.
Thank you.

What would be the loss carried forward/CGT position based on the current legislation be then? If I have a client who runs an FHL business which generated losses from claiming capital allowances, can they offset that loss carried forward against the CGT liability generated from the sale of the FHL property? E.g. FHL bought for £1.0M in 2018 and capital allowances of £100k (all AIA) claimed which created a loss of £100k. FHL is sold in May 2025 for £1.3M. Can I offset the £100k loss (assuming it has not been exhausted in the interim) against the £300k profit to give a net CGT liability of £200k?

Hi Mark Anthistle,
The FHL loss can only be set against any future FHL profit.
Please see guidance here:
PIM4120 - Furnished holiday lettings: treatment of FHL losses for 2011-12 onwards
Thank you. 

When you say FHL losses can only be set against future FHL profits does this mean trading losses or does it include capital gains too? The Gov.UK when you follow the link on allowable losses when establishing final taxable gain (as below) suggests carried forward losses are allowable offset in the CGT calculation is that right? "When you report a loss, the amount is deducted from the gains you made in the same tax year. If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years."

Hi,
 

If your UK FHL businemakes a loss, you can set the loss against your UK FHL profits of later years. Similarly, if your EEA FHL business makes a loss, you can set the loss against your EEA FHL profits of later years. You cannot set the losses of one FHL business against the profits of the other if you have a UK anss d an EEA businessm . They cannot be set against any capital gain either . Thank you .