B8.206 New trade—early years loss relief for trade losses
An individual may claim to carry back trade a loss incurred by him in the tax year in which the trade commenced or in any of the next three tax years1, provided the trade is carried out on a 'commercial' basis2 (see 'What is a 'commercial' trade?' below).
The loss can be carried back against the total income for the three years preceding the year of loss, taking income of an earlier year before that of a later year3.
A claim for relief must be made within 12 months of the normal self-assessment filing date (31 January after the tax year in which the loss is incurred)4.
If a loss would fall to be included in the computations of two successive years of assessment, it is included in the first year and ignored in the second year5, see B3.401
No relief is given under these provisions for a loss sustained in a trade newly carried on by an individual if, when it is first carried on by him, he is living with his spouse or civil partner who has previously carried on the trade, and the loss is sustained in a tax year later than the third year after the trade was first carried on by the other person6.
Order of reliefs
Relief may be claimed for a loss in the opening years either