Unincorporated trader losses Flashcards
(17 cards)
What is the trading income in the income tax computation when there is a trading loss
£Nil
What are the two options for trading losses
Carry forward loss to offset first available future TRADING profits of same trade
or
Offset loss against total income in CY and/or PY
What is the extention claim for trading losses
Offset against capital gains in CY and/or PY
For carry forward trading losses, how much of the loss should be offset
All of it - may waste personal allowance
For trading loss relief against total income, how much of the loss should be offset
All of it - may waste personal allowance
How long does a taxpayer have to claim the relief from trading losseds
12 months from 31 Jan following the end of the tax year in which loss arose
What is the restriction around trading loss and non trade hours for relief against other income
Any trader who spends less than 10 hours per week on average running the business there is a restriction
Maximum of £25k per tax year - any remaining losses can be carried forward
What is the restriction for all traders on the amount by which loss reliefs can reduce other income
Cap is greater of
£50k
and
25% of adjusted total income in the year (total income + payroll giving - grossed up pension)
What is the amount of trading loss that can be offset against capital gains after s64 (CY or PY offset)
Lower of
Loss remaining after s64 claim - relevant amount
Maximum amount (net gain - total capital losses b/f)
What is the treatment for trading losses around class 4 NICs
Trading losses offset against non-trading income are always treated as if carried forward against the first available trading income
This reduces future class 4 when there is trading income
What is the opening year loss relief against total income
A special loss relief that arises in the first four tax years of trade. A trader may elect to carry back such a loss to the three previous tax years on a FIFO basis against TOTAL income
All or nothing
What is terminal loss relief
Relief available for a loss made in final 12 months of trading. A taxpayer may elect to carry back a terminal loss against the trading income of the three preceding tax years on a LIFO basis
How do you calculate the loss on which terminal loss relief can be claimed
Trading loss for 6 April before cessation to date of cessation
less
Trading loss for 12 months before cessation to 5 April before cessation
What is the loss relief for an ongoing partner
c/f or cy/py
What is the loss relief for a new partner
c/f
cy/py
opening years relief
What is the loss relief for a leaving partner
cy/py
terminal loss relief
What is the restriction on loss relief for partners in LLPs
Partners in LLPs may only claim cy/py and opening years relief up to a maximum of their capital contributions into the partnership
Any remaining losses over that can be carried forward