Tax on EEA rental property that makes a loss

Question on foreign tax regarding an EEA rental property. I have a holiday house in Portugal. I am a UK resident etc. I have a rental licence and declare paid guests to SEF and the tax authorities in Portugal. I paid Euro 474 last year in Portugal tax for my rentals. In the UK I declare my EEA rental home, However, I made a loss on my home of £8000 for UK tax purposes so no tax due in the UK. Can I claim back the Euro 474 tax I paid in Portugal from HMRC ? If not can I carry it forward to offset against UK tax in future years? Please let me know Many thanks James

Hi
Thank you for your question, I refer you to guidance PIM4702 Rent from property outside the UK: Income Tax (IT)which advises- Profits or losses of an overseas property business are not combined with the profits or losses of a UK rental business; they are taxed separately and losses on one cannot be set against profits on the other – see PIM1020.
If the business is a furnished holiday let PIM4120 applies- Furnished holiday lettings: treatment of FHL losses for 2011-12 onwards
You cannot claim back the tax paid in Portugal from HMRC, however you may be able to claim Foreign Tax Credit Relief which will then reduce your UK tax liability to provide relief- see HS263 Relief for Foreign Tax Paid 2024 (HS263)or use deduction relief as an alternative to FTCR, you can chose which is most preferable, generally, deduction relief will only be preferable where there is no UK tax liability in the year, for example due to losses or the deferral of a capital gain. Please see Example 5 of the help sheet for further information. 
 

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