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Unincorporated trader losses Flashcards

(17 cards)

1
Q

What is the trading income in the income tax computation when there is a trading loss

A

£Nil

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2
Q

What are the two options for trading losses

A

Carry forward loss to offset first available future TRADING profits of same trade
or
Offset loss against total income in CY and/or PY

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3
Q

What is the extention claim for trading losses

A

Offset against capital gains in CY and/or PY

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4
Q

For carry forward trading losses, how much of the loss should be offset

A

All of it - may waste personal allowance

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5
Q

For trading loss relief against total income, how much of the loss should be offset

A

All of it - may waste personal allowance

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6
Q

How long does a taxpayer have to claim the relief from trading losseds

A

12 months from 31 Jan following the end of the tax year in which loss arose

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7
Q

What is the restriction around trading loss and non trade hours for relief against other income

A

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

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8
Q

What is the restriction for all traders on the amount by which loss reliefs can reduce other income

A

Cap is greater of
£50k
and
25% of adjusted total income in the year (total income + payroll giving - grossed up pension)

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9
Q

What is the amount of trading loss that can be offset against capital gains after s64 (CY or PY offset)

A

Lower of
Loss remaining after s64 claim - relevant amount
Maximum amount (net gain - total capital losses b/f)

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10
Q

What is the treatment for trading losses around class 4 NICs

A

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

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11
Q

What is the opening year loss relief against total income

A

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

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12
Q

What is terminal loss relief

A

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

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13
Q

How do you calculate the loss on which terminal loss relief can be claimed

A

Trading loss for 6 April before cessation to date of cessation
less
Trading loss for 12 months before cessation to 5 April before cessation

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14
Q

What is the loss relief for an ongoing partner

A

c/f or cy/py

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15
Q

What is the loss relief for a new partner

A

c/f
cy/py
opening years relief

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16
Q

What is the loss relief for a leaving partner

A

cy/py
terminal loss relief

17
Q

What is the restriction on loss relief for partners in LLPs

A

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