Trading Reliefs For Ps And STs Flashcards
What is relief for trading loss
Where a trading loss is deducted from other income
Can you use more than one trading relief
Choose which one then use another if you still have more loss
Do Ps all need to use same relief
No they can chose their own
Are trading reliefs applied automatically
No must apply to HMRC for these to be applied
Start up loss relief
Aka early trading loss relief
For loss in first 4 tax years of new business
Set against total income in 3 years prior to loss
Can be against previous business or employment
Set against earlier years first
Claim on or before first anniversary of 31 Jan following end of tax year of loss
Set against total income reducing it to zero to lose personal allowance
Carry across / one year carry back relief for trading losses generally
Against total income for that tax year
Total income from previous tax year
Set against total income from same year then balance against previous year
Previous year and then same year
Set against total income reducing it to zero so lose personal allowance
Claim within 1 year from 31 jan following end of year or loss
Which losses apply to a particular tax year
The losses of the accounting period which ends in that tax year
Set off against capital gains
Set losses against chargeable gains in same tax year
Only when carry across is used but some loss is still left
Claim within 1 year from 31 jan after end of tax year of loss
Carry forward relief
Set loss against subsequent profits in future years
Carry forward indefinitely
Notify HMRC within 4 years after end of year of loss
Set against earlier years first
Against profits that trade makes, not total income or income from other employment or business so retain personal allowance
Can carry forward
Carry across
Carry back
Be used together for same loss
Yes
Carry back of terminal trading loss
Loss incurred in final 12 months of trading can be carried across and set against trading profits in final year
Then
Carried back and set against trading profits in previous 3 years
Only apply to trading income from same business
Start with previous year and work back
No cap on amount that can be relieved
Claim within 4 years after end of tax year to which the claim relates
Carry forward relieved on incorporation of business
Set against income received from company eg salary or dividends in order they choose
80% or more of consideration for business must be shares
Carry forward indefinitely
No cap on amount that can be relieved
Notify HMRC within 4 years after end of tax year in which the loss was incurred
Cap on trading reliefs - start up relief and carry across/ carry back
Cap of the greater of £50k or 25% of the taxpayers income in the tax year in relation to which the relief is claimed
Cap only relates to income from sources other than the trade which produced the loss
