Relief for current year trading losses

Produced by Tolley
Relief for current year trading losses

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Relief for current year trading losses
  • Considerations
  • Cap on unlimited income tax reliefs
  • Accelerate the relief

Relief for trading losses for sole traders is discussed in detail in the following guidance notes:

  1. Sole trader loss relief ― opening years

  2. Sole trader losses ― established trades

  3. Sole trader losses on cessation

Considerations

The main factors which should be taken into account in loss relief planning are as follows:

  1. marginal rate of tax ― for maximum savings, losses should be offset against income taxed at higher marginal rates of tax in priority

  2. personal allowances and annual exempt amount ― where possible, relieve losses in such a way as to preserve these allowances

  3. cash flow ― consider whether it is more important to the taxpayer to claim relief for earlier years, which may generate a cash repayment, or to obtain relief at the highest marginal rate

Altho

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