Unincorporated Trader Losses

Question 1

3 things to consider when deciding which loss relief to claim

Answer 1

Timing (earlier before later)
Best to get relief against higher tax rate
Preference not to lose Personal allowance

Question 2

What is S.83

Answer 2

Trading losses are automatically offset against the first future trading profits of the same trade

Question 3

What is S.64

Answer 3

Offset a trading loss against total income in the current tax year and previous tax year

Question 4

Restriction on relief for non active traders

Answer 4

Limited to £25,000 for other income under S.64 and S.83

Question 5

What is s261B

Answer 5

Remaining trading loss after s64 offset against capital gains in the current and previous tax year

Question 6

What is the amount of trading loss that can be offset against capital gains

Answer 6

Lower of:
Loss remaining after claim (relevant amount)
Total capital gains - capital losses - capital loss C/fwd (maximum amount)

Question 7

Trading losses when calculating class 4 NICs

Answer 7

Losses offset agaisnt non-trading income are treated as if carried forward against the first available trading income

Question 8

Trading losses when calculating class 2 NICs

Answer 8

Cannot be brought foward

Question 9

What is S.72

Answer 9

Opening year loss relief in the first 4 years of trade. FIFO basis

Question 10

What is S.89

Answer 10

Terminal loss relief available against the 3 preceding tax years. LIFO basis

Question 11

Limit for partners claiming relief

Answer 11

Can only claim s64 and s72 loss relief up to a maximum of their capital contributions