Chapter 9 - Trading losses

Question 1

What are the two results of a trading loss recorded in financial year?

Answer 1

1)Trading income should be recorded as nil
2) Tax relief can be obtained for the loss

Question 2

What things can a trader set trading losses against?

Answer 2

Individuals income and then capital gains

Question 3

Where can losses incurred in any of the first four tax years be carried back to?

Answer 3

Any of the three years preceding the year of loss on a FIFO basis (go back three years and work forward).

Question 4

How do you offset a terminal loss (last 12 months of trading)

Answer 4

Work backwards into preceding three years

Question 5

What is the cap on loss relief?

Answer 5

The higher of:
£50,000
25% of total income