Losses

Question 1

What section deals with current year loss relief?

Answer 1

Section 64

Question 2

What is the golden rule re personal allowances & losses?

Answer 2

Loss claims are all or nothing so you lose the personal allowance

Question 3

What sections deal with the commercial basis rule?

Answer 3

64 & 66

Question 4

You have a loss - can you set it against capital gains or other income first?

Answer 4

You must use it against other taxable income before you can use it on gains.

Question 5

What comes first, the capital loss brought forward or the current year loss relief?

Answer 5

Current year loss relief first

Question 6

How far back can you go against total income with a loss?

Answer 6

To the preceding year

Question 7

What order must losses be used against total income?

Answer 7

Any order, but capital gains is always last.

Question 8

Must a trader utilise all of a loss?

Answer 8

Yes - either all of the loss or against all of the income. No partial claims allowed.

Question 9

When loss planning, what are the three rules and in what order?

Answer 9

1. Marginal rates of tax.
2. Loss of personal allowances.
3. Timing

Question 10

What section deals with capital gains and utilising trading losses?

Answer 10

S71 & also TCGA 1992 s261B

Question 11

What is the s71 loss the lower of?

Answer 11

a. The remaining loss after a s64 claim or

b. The relevant maximum (net gains less losses bf)

Question 12

Can you make a partial claim of capital gains losses in conjuntion with trading losses?

Answer 12

Yes, you can manipulate it so that you use the CGT allowance

Question 13

What section deals with carry forward of losses?

Answer 13

S83

Question 14

What can you carry losses forward to?

Answer 14

Future profits of the same trade but MUST be used against first available profits.

Question 15

What is the time limit for s64 loss claims?

Answer 15

First anniversary of 31 January follwoing the end of the tax year of the loss.

Question 16

A loss arises in 2018/19 - what is the deadline for the claim to be submitted?

Answer 16

31 Jan 2021

Question 17

What legislation deals with restrictions on loss relief?

Answer 17

Section 24a

Question 18

When looking at loss restriction how is the allowed maximum worked out?

Answer 18

£50,000 or 25% of adjusted total income

Question 19

How is an individuals total adjusted income worked out?

Answer 19

Total income less gross amount of any personal pension contributions

Question 20

If a loss is restricted to say £50,000 does it apply to all profits or just some ?

Answer 20

It only applies to non trading income . Trading income and capital gains are not affected by this

Question 21

What section deals with terminal loss relief?

Answer 21

Sec 89 - 91

Question 22

What is the terminal loss period?

Answer 22

The last 12 months

Question 23

When calculating a terminal loss for the final split period and one of the periods has a profit, what do you do with it?

Answer 23

Ignore it

Question 24

In what order is terminal loss relief used?

Answer 24

Later years first

Question 25

What section deals with early trade loss relief?

Answer 25

72-74

Question 26

How far back can you go with early trade loss relief?

Answer 26

3 years

Question 27

How long does an early trade loss reief last?

Answer 27

First four years of trading

Question 28

WHat order do you claim relief for early trade loss relief?

Answer 28

Earlier years first

Question 29

A trader has an opening year loss in 2018/19 - he wants to make a claim against general income - what year is first?

Answer 29

2015/16 (3 years)

Question 30

Can you claim early trade loss relief against current year income?

Answer 30

No

Question 31

Is a s72 early trade loss relief restricted and how?

Answer 31

Yes - £50,000 or 25% of income