Trading Losses

Question 1

Introduction

What is Shown in The Tax Computation for a Loss-Making Year?

Answer 1

£Nil.

Question 2

Loss Relief

What are Losses Set Against Under Section 64?

Answer 2

Net Income in the Current and/or Preceding Tax Year.

Net Income is Also Referred to as ‘General Income’

Question 3

Loss Relief

When is a Section 71 Claim Available?

Answer 3

Once the Maximum Section 64 Claim Has Been Made for a Tax Year.

Question 4

Loss Relief Claims

When Must Loss Relief Claims Under Section 83 be Made?

Answer 4

Within 4 Years Since the Loss Arose.

5 April 2029 for Losses Arising in 2024/25

Question 5

Effects on Tax Payments

Tax Refunds Under Section 64 Carrybacks are:

Answer 5

• Calculated Using That Year’s Rates;
• Given as a Credit in Current Tax Year.

Question 6

Loss Relief Restrictions

Certain Loss Relief Claims are Restricted to the Greater of:

Answer 6

• £50,000;
• 25% of Adjusted Total Income.

‘Adjusted Total Income’ is Total Income Less Any PPCs

Question 7

Loss Relief Restrictions

What Does The Restriction Exclude?

Answer 7

Losses Set Against Income From The Same Trade.

Question 8

Other Restrictions

What is a Commercial Trade?

Answer 8

Trade Carried on Throughout a Tax Year for Profit.

Question 9

Early Trade Loss Relief

What is a Section 72 Claim?

Answer 9

Losses Made in the First 4 Tax Years of Trading are Set Against Net Income of the 3 Preceding Tax Years.

Question 10

Early Trade Loss Relief

How are Losses Under a Section 72 Claim Allocated?

Answer 10

On a ‘First in, First Out’ Basis.