Losses Flashcards
What section deals with current year loss relief?
Section 64
What is the golden rule re personal allowances & losses?
Loss claims are all or nothing so you lose the personal allowance
What sections deal with the commercial basis rule?
64 & 66
You have a loss - can you set it against capital gains or other income first?
You must use it against other taxable income before you can use it on gains.
What comes first, the capital loss brought forward or the current year loss relief?
Current year loss relief first
How far back can you go against total income with a loss?
To the preceding year
What order must losses be used against total income?
Any order, but capital gains is always last.
Must a trader utilise all of a loss?
Yes - either all of the loss or against all of the income. No partial claims allowed.
When loss planning, what are the three rules and in what order?
- Marginal rates of tax.
- Loss of personal allowances.
- Timing
What section deals with capital gains and utilising trading losses?
S71 & also TCGA 1992 s261B
What is the s71 loss the lower of?
a. The remaining loss after a s64 claim or
b. The relevant maximum (net gains less losses bf)
Can you make a partial claim of capital gains losses in conjuntion with trading losses?
Yes, you can manipulate it so that you use the CGT allowance
What section deals with carry forward of losses?
S83
What can you carry losses forward to?
Future profits of the same trade but MUST be used against first available profits.
What is the time limit for s64 loss claims?
First anniversary of 31 January follwoing the end of the tax year of the loss.
A loss arises in 2018/19 - what is the deadline for the claim to be submitted?
31 Jan 2021
What legislation deals with restrictions on loss relief?
Section 24a
When looking at loss restriction how is the allowed maximum worked out?
£50,000 or 25% of adjusted total income
How is an individuals total adjusted income worked out?
Total income less gross amount of any personal pension contributions
If a loss is restricted to say £50,000 does it apply to all profits or just some ?
It only applies to non trading income . Trading income and capital gains are not affected by this
What section deals with terminal loss relief?
Sec 89 - 91
What is the terminal loss period?
The last 12 months
When calculating a terminal loss for the final split period and one of the periods has a profit, what do you do with it?
Ignore it
In what order is terminal loss relief used?
Later years first
What section deals with early trade loss relief?
72-74
How far back can you go with early trade loss relief?
3 years
How long does an early trade loss reief last?
First four years of trading
WHat order do you claim relief for early trade loss relief?
Earlier years first
A trader has an opening year loss in 2018/19 - he wants to make a claim against general income - what year is first?
2015/16 (3 years)
Can you claim early trade loss relief against current year income?
No
Is a s72 early trade loss relief restricted and how?
Yes - £50,000 or 25% of income
