The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Where a partner either retires from partnership or there is a permanent cessation of a partnership’s business, special ‘terminal’ loss relief rules apply. The rules also apply to sole traders.
The rules for individual partners and corporate partners are similar in operation in that loss relief can be claimed for the year of the loss and the preceding three years.
For corporate partners, the terminal loss relief provisions will only apply if the trade carried on in partnership was a separate trade in its own right. If it was not, the loss from the partnership will be relieved as detailed in the Relief for partnership losses guidance note.
If a taxpayer’s trade, profession or vocation ceases and has incurred a “terminal loss” then the loss can be deducted from any trading profits in the tax year of cessation and carried back to the three preceding tax years. Losses must be relieved against later years first and are offset against profits of the trade, profession or vocation only.
The terminal loss is the loss made in the 12 months ending with the date of cessation. This may not be the same
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