Loss relief Flashcards
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INDIVIDUALS
Complete the below table for the following types of loss relief avaliable to individuals
Type of relief:
Claim necessary?
Set Against:
Time/Usage limits:
Restrictions?
Carry forward loss relief
CY CB loss relief
Gains relief
Opening years loss relief
Terminal loss relief
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SHOULD BE IN TAX
Type of relief:Carry forward loss relief
Claim necessary? Automatic
Set Against:Next avaliable profits of the same trade
Time/Usage limits: Full amount used, potential wastage of PA
Restrictions? None
Type of relief: CY CB loss relief
Claim necessary? Yes, but can be used either/both in any order
Set Against: Total income
Time/Usage limits: Restricted to higher of £50,000 and 25% adjusted total income (less grossed up PPC & add payroll giving). The restriction does not apply to deduction from income of the same trade
Full amount used, potential wastage of PA
Restrictions? Must be carrying on trade with a view to making profit
Type of relief: Gains relief
Claim necessary? Yes
Set Against: Gains
Time/Usage limits: Can only be applied after CY CB claim against other income
Restrictions? Losses must be used agains gains in CY before CB. Deemed to relieve b/f losses first.
Subject to Non active trader restrictions (£25,000)
Full amount used, potential wastage of PA
Type of relief:Opening years loss relief
Claim necessary? Yes. use basis periods to determine 4 tax years
Set Against:: Total income. No overlap losses
Time/Usage limits:Avaliable if a loss occurs within the first four tax years of trade. Then set against total income on a FIFO basis
Restrictions? Restricted to higher of £50,000 and 25% adjusted total income (less grossed up PPC & add payroll giving). The restriction does not apply to deduction from income of the same trade
Subject to Non active trader restrictions (£25,000)
Full amount used, potential wastage of PA
Type of relief: Terminal loss relief
Claim necessary? Yes
Set Against: Trading profits of the same trade
Time/Usage limits: LIFO 3Y
Restrictions? terminal loss = loss from 5th April to cessation - overlap P + Xm to 5th Apr if loss
Full amount used, potential wastage of PA
SHOULD BE IN TAX
Companies
Complete the below table for the following types of loss relief avaliable to companies
Type of relief:
Claim necessary?
Set Against:
Time/Usage limits:
Restrictions?
Carry forward loss relief
CY CB loss relief
Gains relief
Terminal loss relief
NTLR loss relief
Property losses
SHOULD BE IN TAX
SHOULD BE IN TAX
Type of relief: Carry forward loss relief
Set Against: Total profits of the future periods
Time/Usage limits: Full amount does not need to be used, can preserve QCDs
Restrictions? Relevant maximum of C/f relief = £5m per 12m period + 50% excess profits over £5m
Type of relief: CY CB loss relief
Set Against: Total income
Time/Usage limits: Must use CY before CB
Restrictions? All or nothing claim, potential wastage of QCDs
Type of relief: Gains relief
Set Against: Gains not total profits
Time/Usage limits: If there are both capital and other losses, need to work out the relevant maximum for gains and then do normal relevat maximum calc and less the amount used against capital losses
Restrictions? Must first use losses in CY
Type of relief: Terminal loss relief
Set Against: Total profits
Time/Usage limits: LIFO 3Y
Restrictions? All or nothing claim, potential wastage of QCDs
Can only make claim if we have made CY loss claim first as is an extension of the CB claim
Terminal loss = loss incurred in the final 12m of trade
Type of relief: NTLR loss relief
Time/Usage limits: Avaliable options:
* CY: Set against total profits of same period. Partial claims allowed to preserve QCDs
* CB: Set against NTLR of previous 12m. Partial claims allowed to preserve QCDs. Do not need to CY first
* CF: Set againsttotal profits of future accounting periods. Partial claims allowed to preserve QCDs
Type of relief: Property losses
Time/Usage limits: Must CY then can CF
* CY: Must first be set against total profits in the same acc period.
* CF: Set against total profits of future accounting periods.
SHOULD BE IN TAX
GROUPS
Explain loss relief groups
- When do they exist
- Can you be a member of more than 1?
- What are losses set against
- What restrictions apply to the amount that can be group relieved
SHOULD BE IN TAX
SHOULD BE IN TAX
Loss relief groups:
* 75% direct or indirect control
* O/s companies unlikely to be included as losses cannot be surrendured overseas
* Can be a member of more than one loss group
* Loss of the surrendering company can be set against the total profits of the claiming company after deducting b/f & cy losses but before deducting cb
* Entities are deemed to use carried forward losses agains own TTP before sharing to group
* Losses carried back cannot be group relieved
* Can choose amount to relieve
* Revelant maximum = £5m per 12m period + 50% excess profits over £5m
* The relevant maximum is split for groups
SHOULD BE IN TAX
GROUPS
Explain chargeable gains groups
- When do they exist
- Can you be a member of more than 1?
- How do asset transfers work between group members
- What happens when an asset is disposed of outside of the group that was initiallty transferred within the group
- What happens when a company leaves the group whilst in possession fo an asset that had been transferred within the group
- What restrictions apply to the amount that can be group relieved
SHOULD BE IN TAX
SHOULD BE IN TAX
Chargeable gains groups:
* 75% direct control and 75% subsidiaries of those subsidiaries with a minimum of > 50% indirect control of subs’ subs
* A company cannot be in more than one group
* Nil gain nil loss transfers of assets. Deemed proceeds for transferor = cost + indexation allowance
* SSE does not appy where nil gain/nil loss treatment applies
* Treatment is mandatory, doesn’t require election
* Gain arisess when asset is disposed of outside group. Deemed cost = original deemed proceeds
* Degrouping charge arises when company leaves group and still owns asset. The cost = original price paid for asset. Deemed proceeds = market value of asset at time degrouping
* An election can be made ro reallocate a chargeable gain or loss
