B2.809 Qualifying expenditure for post-cessation trade relief purposes
There are a number of ways in which post-cessation expenses can be relieved. However, post-cessation expenses must first be set against post-cessation receipts arising in the same period from the same trade before considering any other method of relief. A person who has permanently ceased to carry on a trade, profession or vocation may incur expenses arising from the trade etc after the date of cessation, which were not provided for in the final accounts and which do not qualify for, or cannot be relieved by, deduction from post-cessation receipts.
If there are no post-cessation receipts in the period, or the post-cessation expenses exceed the receipts, relief against total income of the person who incurred the expense is potentially available, although the relief is not available to companies. Post-cessation trade relief against total income and capital gains is available (up to a limit, see B2.810) where, within seven years of that cessation:
• a person makes a qualifying payment (defined below), or
• a qualifying event occurs in relation to a debt of the trade owed to that person1
. An executor may make a claim during the period of administration against the income and gains of the estate of a person who formerly carried on the business and who made a qualifying post-cessation payment2.
Qualifying payment for post-cessation trade relief purposes
The expenditure which qualifies for relief is as follows3:
• the cost of remedying defective