Opening Year Losses (s.72)

Question 1

What loss relief is available in the opening years of trade?

Answer 1

Early years trade loss relief, a s.72 claim.

Question 2

What tax years does Early Years Trade Loss apply to? re: s.72

Answer 2

The first 4 tax years of trading.

Question 3

What is a s.72 claim set against?

Answer 3

A s.72 claim is carried back against net income of the 3 preceding tax years on a FIFO basis (ie the earliest of the 3 years first)

Question 4

What is the s.72 claim restriction and what doesn’t it apply to?

Answer 4

The restriction is applies to the amount of loss which can be relieved against non-trading income.

Certain loss relief claims are limited to the greater of:

• £50,000; and
• 25% of the individuals adjusted total income*

There is no restriction on the amount of the loss which can be offset against income from the same trade.

Question 5

When must a s.72 claim be made?

Answer 5

Claim must be made by the first anniversary of 31 January following the tax year of the loss.