Unincorp Trading Losses

Question 1

Sole trader

Option 1

Answer 1

Carry forward against future TRADING profits

Default if no election made

Question 2

Sole trader

Option 2

Answer 2

Carry back or current year, or both. In any order.

Carry forward excess.

Against TOTAL INCOME.

All or nothing, may waste PA.

Limitssss

Question 3

Sole trader

Limits on the offset against other income for option 2

Answer 3

If trader works less than 10 hours per week,
Loss relief limited to: 25K

All traders are subject to a limit of:
The higher of …
50K

25% adj total income in the year loss is offset by

Question 4

Sole trader

What is adjusted total income

Answer 4

Total income plus payroll giving donations

LESS

Grossed up PPS contributions and gift aid

Question 5

Sole trader

Option 3

Answer 5

Offset against capital gains, once option 2 has been done (I.e. offset against total income first)

Limited to lower of:

Relevant amount:
Remaining gains amount

Maximum amount:
Capital gains realised
Less CY capital losses
Less bf capital losses (even if not used)

Question 6

Terminal loss relief

When to make claim

Answer 6

Loss in the final 12 months trading

Can elect to be offset against total income (not capital gains) from previous 3 years.

Starts with most recent, working back.

4 years from end of last TY

Question 7

Opening year losses

Answer 7

If loss is made in one of first 4 tax years, can carry back 3 years on FIFO basis.

Against total income (before PA)

Claim within 12 months of following 31st Jan after TY.

Question 8

National insurance relief

Answer 8

same relief option as for other trading losses.

But assume against trading income only, no matter the loss option selected.

Reduce trading income only, carry forward the XS.

Calculate NI from that amount of trading income.

Question 9

Partnership loss relief.

What restrictions

Answer 9

Same options as sole trader on their allocated loss

Restrictions on loss relief for partners in LLPs.
Carry forward loss relief is capped at the amount of their contribution.

Question 10

Terminal loss relief for partnerships

Answer 10

If traders final period DOESNT end between 31 march and 5 April.

Do 6 April before cessation to date of cessation: add this loss

And

12 months before cessation to the 5th of April before cessation: add this loss

If either are profit then ignore.

Add them together and that’s the terminal loss amount.

Question 11

Deadline for all sole trader losses except terminal loss is?

Answer 11

12 months from the 31st of jan following the end of TY

for terminal loss relief:
4 years from end of last TY