The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
In summary, for continuing trades, current year trading losses may be relieved against the following:
total income of the year of loss or the preceding year, or
current year or preceding year capital gains, to the extent that losses cannot be relieved against current or prior year total income, or
future profits arising from the same trade
ITA 2007, ss 83, 64; TCGA 1992, s 261B
This is discussed in detail in the Sole trader losses ― established trades guidance note. Relief for trading losses in opening and closing years is discussed in the Sole trader loss relief ― opening years and Sole trader losses on cessation guidance notes.
This guidance note focuses on the planning aspects that need to be considered to ensure the best outcome for the taxpayer.
The period over which a business may carry back trading losses has been extended from one year to three years in response to the difficulties caused by the coronavirus (COVID-19) pandemic. This measure will be legislated in Finance Bill 2021. Full details can be found in the Sole trader losses ― established trades guidance note.
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