Taxation Flashcards
(22 cards)
Who can claim start-up loss relief?
A: Sole traders or partners who make a trading loss in one of the first 4 tax years of starting their business.
Q: What does start-up loss relief allow a taxpayer to do?
A: It allows them to set the loss against their total income from the 3 tax years preceding the year of the loss.
Q: In what order must previous years be used for start-up loss relief?
A: You must go backwards year by year, starting with the earliest of the three previous tax years.
Who can claim carry-across and one-year back relief?
Any sole trader or partner who makes a trading loss in any tax year (not limited to start-up years).
Q: What does carry-across and one-year back relief allow the taxpayer to do?
Set their trading loss against their total income from the same tax year, the previous tax year, or both.
Can the loss be split across two tax years?
Yes, the taxpayer can choose to offset the loss partly in the current year and carry the rest back to the previous year (or vice versa).
What is a downside of using this relief to reduce total income to £0?
Loses their personal allowance of 12570.
When can a trading loss be set against capital gains?
Only after it has been used against total income via carry-across or one-year-back relief and there is a remaining balance.
Can a taxpayer choose to apply the trading loss directly to capital gains without using income reliefs first?
❌ No — capital gains set-off is only available after attempting to use the loss against income.
What does carry-forward relief allow a taxpayer to do?
: Carry a trading loss into future years and set it against profits from the same trade.
Can carry-forward relief be used against other types of income like salary or rent?
No — it can only be used against future profits from the same trade.
: How long can a trading loss be carried forward?
Indefinitely — until it is fully used up, as long as the business continues.
Why might a taxpayer choose to carry a loss forward instead of using it now?
To avoid wasting their personal allowance or to use the loss in a future year with higher profits and save more tax.
What is a terminal trading loss?
: A trading loss made in the final 12 months before a sole trader or partner permanently ceases trading.
What does terminal loss relief allow a taxpayer to do?
Carry the terminal loss backwards to offset against trading profits from the 3 years before the loss year.
: In what order must terminal loss relief be applied?
: Start with the most recent tax year, then go back year by year for up to 3 years or until the loss is fully used.
When does carry-forward on incorporation relief apply?
When a sole trader or partner incorporates their business and has unrelieved trading losses from before incorporation.
: What does the taxpayer receive in exchange for their business for the relief to apply?
A: They must receive 80% or more of the consideration in the form of shares in the new company.
What duty is typically implied into an employment contract regarding confidential information?
A duty not to disclose confidential information gained during the course of employment.
‘The tenant shall not make any internal, non-structural alteration to the Property without the consent of the Landlord.’ - qualified or fully qualified?
qualified
The tenant shall not make any internal, non-structural alteration to the Property without the consent of the Landlord, such consent not to be unreasonably withheld or delayed.” - qualified or fully qualified
fully qualified
