Early Termination of Tenancy - Rent Received in Advance

I leased out a residential property for a fixed term of 2 years. All rentals for 2 years had been received in advance from the tenant. I had also paid tax for the 2-year rental income received in advance. After 1 year from the inception of the tenancy, the tenant requested to terminate the tenancy early (say 7 months before the expiry of the tenancy) and requested to get refund for a portion of rental for the remaining months of the tenancy. If a termination agreement can be reached, can I claim back the tax paid in advance for the remaining months of tenancy that the tenant surrendered (i.e. tax paid on the 7-month rentals)? How should I report such rental loss (7-month rentals) in the current year of assessment?

Hi,

You should record your loss on the property section of your Self Assessment tax return.

Rental losses made in a particular tax year can be carried forwards and set against future rental profit in the next tax year.

Property business losses can only be set against general income in limited circumstances. You can see guidance here:

PIM4210 - Losses: setting losses against future profits

Losses made in one business cannot be carried to another rental business. You can see information here:

PIM1020 - Introduction: what is a UK property business?

Thank you.