ARE THE LOSSES FROM MY RENTAL IN NZ TAX-DEDUCTIBLE IN THE UK (IF I’M WORKING THERE)?

Are losses from my NZ rental tax-deductible in the UK? Here’s the situation. You own a rental property in New Zealand, and it’s running at a loss. You’re now living and working in the UK. Can you offset that loss against your UK salary? This guide gives you the straight answer, and what actually happens to the loss in the meantime.

30-Second Read

• No. HMRC treats New Zealand rental income as an “overseas property business.” Losses from it can’t be offset against your UK salary or other general income.
• The loss doesn’t disappear, though. It carries forward. It can only be set against future profits of that same overseas property business — not your UK salary, not a UK rental property, and not any other overseas property you hold separately.
• This applies whether or not you’re UK tax resident. You’ll still have a NZ tax return filing obligation. The loss carries forward there too, under NZ’s own ring-fencing rules.
• A new UK–New Zealand tax treaty was signed on 1 June 2026, but it isn’t in force yet. The 1983 treaty, as updated over the years, still governs for now.
• A similar “no offset against general income” principle applies if you’re working in Australia. The specific mechanics differ, though — see the country-specific notes below.

 

 

What Does HMRC Actually Say?

Under section 118 of the Income Tax Act 2007(opens in new tab), a loss from a UK property business or an overseas property business gets carried forward. It can only be deducted from future profits of that same business. It can’t be deducted from your salary, dividends, or any other kind of income.

Critically, HMRC treats your overseas property business entirely separately from any UK property business you might also have. A loss on your New Zealand rental can’t offset profit from a UK rental. It can’t offset profit from a rental in a different country either. Each is ring-fenced on its own. 

Relief against general income is available only in narrow circumstances — mainly around specific capital allowances. It doesn’t apply to an ordinary rental loss. For most landlords with a straightforward negatively-geared NZ property, that exception won’t apply.

So What Happens to the Loss?

You still need to file an annual tax return in New Zealand. If you have no other New Zealand taxable income, the loss carries forward here too. This happens under NZ’s own ring-fencing rules, until you eventually have rental profit to offset it against.

On the UK side, the loss is reported on the foreign pages of your Self Assessment return. It carries forward there separately, available only against future profit from that same overseas property business. Whether you need to declare it on your UK return at all in a given year is worth confirming with a UK-qualified accountant. The specifics depend on your residency position and how the return is prepared.

Does UK Tax Residency Status Change Anything?

No. Whether or not you’re UK tax resident, the New Zealand filing obligation remains. The loss still can’t be offset against your UK income — it can only carry forward.

The New UK–NZ Tax Treaty: What’s Changing

On 1 June 2026, the UK and New Zealand signed a new double taxation convention. It’s intended to eventually replace the 1983 agreement that has governed cross-border tax between the two countries for over four decades. As of now, it is not yet in force. The current operative treaty remains the 1983 convention, as modified by the 2018 Multilateral Instrument and a 2023 Memorandum of Arrangement.

Nothing changes in practice until the new treaty is ratified and brought into force. It’s worth keeping an eye on this if you have significant cross-border income, since treaty timing can affect withholding rates and relief calculations. For the rental loss question specifically, though, this is a domestic UK tax rule — not something the treaty itself governs either way.

Worked Example

Monica moves to London for work, keeping her Auckland rental. Her NZ rental runs at an $8,000 loss for the year, mostly from mortgage interest. She still files a New Zealand tax return. The loss carries forward there under the ring-fencing rules, since she has no other NZ rental income to offset it against. On her UK Self-Assessment return, she reports the position on the foreign pages. Monica can’t use the loss against her UK salary, though — it simply carries forward in the UK too, available only if her NZ property business turns a profit in a future year.

Other Countries

• Australia: A similar “no offset against general income” principle applies, though the specific mechanics differ from the UK. Talk to us about your specific situation if you’re working in Australia rather than the UK. See this article for more specific info on that subject.
• Singapore and Malaysia: Foreign-sourced income gets treated differently again in each of these jurisdictions. Worth a separate conversation, given how much the specifics vary.
• Thailand: Ownership and tax obligations here have their own distinct considerations too.

Checklist

• ✅ Confirm you’re still filing an annual NZ tax return, even while living overseas
• ✅ Track your NZ rental loss carrying forward under NZ’s ring-fencing rules
• ✅ Check with a UK-qualified accountant on how (and whether) to report the loss on your UK Self Assessment return
• ✅ Don’t assume the loss can offset your UK salary — under current rules, it can’t
• ✅ Keep an eye on the new UK–NZ tax treaty’s progress toward ratification, particularly if you have other cross-border income beyond the rental

Common Questions

Can I offset my NZ rental loss against my UK salary at all? No, under current UK rules. It can only be carried forward against future profit from that same overseas property business.

Does it matter whether I’m UK tax resident or not? No. Either way, you still have a NZ filing obligation. The loss can only carry forward, not offset your UK income.

Has the new 2026 UK–NZ treaty changed this? Not yet. The new treaty isn’t in force. This specific rule comes from UK domestic tax law anyway, not the treaty itself.

What if I also have a UK rental property? Your NZ loss still can’t offset UK rental profit. HMRC treats your overseas property business and your UK property business as entirely separate, each ring-fenced on its own.

I got a FATCA/CRS letter from my bank. Is that somehow related to this? Anyone with UK ties is exactly the kind of person likely to get a FATCA/CRS letter from their NZ bank. See this article for more info

Do you have any info about transferring my UK Pension to NZ? How much tax would I pay? Yes, see this comprehensive write-up

Summary

Are losses from your NZ rental tax-deductible in the UK? No. HMRC ring-fences overseas property business losses. Your New Zealand rental loss can only carry forward against future profit from that same property business — not against your UK salary or any other income. The loss also carries forward separately in New Zealand under its own ring-fencing rules. Your NZ filing obligation continues regardless of your UK residency status. A new tax treaty between the two countries was signed in mid-2026, but it isn’t in force yet. For now, the position described here remains current.

Talk to EpsomTax.com About Your Cross-Border Position

Managing a NZ rental property while living and working overseas involves two tax systems at once. It’s easy to miss an obligation on one side while focused on the other. Contact EpsomTax.com to make sure your NZ filing obligations are covered. We can also point you toward a UK-qualified accountant to handle your UK-side reporting properly.