The chancellor introduced an extended three-year carry-back for trading losses at Budget 2021. The measure is included in Finance Bill 2021. It has now been amended to confirm that Furnished Holiday Lettings (FHLs) will not qualify for extended loss relief.

Finance Bill 2021 introduces legislation to allows a business incurring losses in 2020-21 and 2021-22 to carry back these losses for up to three years, subject to a £2 million cap, as one of the government's responses to COVID-19.

When first published, the draft bill included a specific reference to FHLs which has now been withdrawn.

  • In the draft bill, Schedule 2 sets out the criteria for the relief.
  • Paragraphs 1 and 2 require a person to be entitled to claim s.64 ITA 2007 Sideways relief, in order to make a claim for the extended carry-back.
  • Paragraph 3(5) stated that FHL businesses were to be treated as trades for the purposes of paras 1 and 2. This paragraph has now been removed. The amendment states that as FHL businesses do no have an entitlement to s.64 sideways relief due to s.127(3A) ITA 2007, there can be no entitlement to the extended carry-back and so the reference is unnecessary.

Losses incurred by an FHL business can only be carried forward and relieved against profits from the same pool of FHL properties. UK properties would form one pool. EEA FHL properties would form another pool.


The original reference to FHL businesses as trading caused some confusion as to whether the loss would be available to FHLs. The Institute of Chartered Accountants in England and Wales (ICAEW) had recently published guidance on what legislative changes would be required to allow FHLs to take advantage of the new relief. The government published the amendment shortly afterwards.

Useful guides on this topic

Furnished Holiday Letting
What is Furnished Holiday Letting? How do you qualify for Furnished Holiday Letting? What are the rules for Furnished Holiday Letting?

Losses, trade losses and sideways relief
How can trade losses be utilised? What are the restrictions?

Finance Bill 2021: tax update & rolling planner
This rolling planner tracks the key tax announcements that affect the 2021-22 tax year and beyond.

External links

Finance Bill 2021: Amendment 16

Finance Bill 2021

ICAEW Representation 36/21

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