|
| |
|
accommodation to be treated as a trade for the purposes of this Part (see section |
| |
| |
Carry-forward property loss relief |
| |
118 | Carry forward against subsequent property business profits |
| |
(1) | Relief is given to a person under this section if the person— |
| 5 |
(a) | carries on a UK property business or overseas property business (alone |
| |
or in partnership) in a tax year, and |
| |
(b) | makes a loss in the business in the tax year. |
| |
(2) | The relief is given by deducting the loss in calculating the person’s net income |
| |
for subsequent tax years (see Step 2 of the calculation in section 23). |
| 10 |
(3) | But a deduction for that purpose is to be made only from profits of the |
| |
| |
(4) | In calculating a person’s net income for a tax year, deductions under this |
| |
section from the profits of a business are to be made before deductions of any |
| |
other reliefs from those profits. |
| 15 |
(5) | No relief is to be given under this section so far as relief for the loss is given |
| |
| |
(6) | This section needs to be read with section 119 (how relief works). |
| |
| |
This section explains how the deductions are to be made. |
| 20 |
The amount of the loss to be deducted at any step is limited in accordance with |
| |
| |
| |
| |
Deduct the loss from the profits of the business for the next tax year. |
| 25 |
| |
| |
Deduct from the profits of the business for the following tax year the amount |
| |
of the loss not previously deducted. |
| |
| 30 |
| |
Continue to apply Step 2 in relation to the profits of the business for subsequent |
| |
tax years until all the loss is deducted. |
| |
Property loss relief against general income |
| |
120 | Deduction of property losses from general income |
| 35 |
(1) | A person may make a claim for property loss relief against general income if— |
| |
(a) | in a tax year (“the loss-making year”) the person makes a loss in a UK |
| |
property business or overseas property business (whether carried on |
| |
alone or in partnership), and |
| |
|
| |
|
| |
|
(b) | the loss has a capital allowances connection or the business has a |
| |
relevant agricultural connection. |
| |
(2) | The claim is for the applicable amount of the loss to be deducted in calculating |
| |
| |
(a) | for the loss-making year, or |
| 5 |
(b) | for the next tax year. |
| |
| (See Step 2 of the calculation in section 23.) |
| |
(3) | The claim must specify the tax year for which the deduction is to be made. |
| |
(4) | But if the applicable amount of the loss is not deducted in full in giving effect |
| |
to a claim for the specified tax year, the person may make a separate claim for |
| 10 |
property loss relief against general income for the other tax year. |
| |
(5) | For this purpose “the other tax year” means the tax year which was not |
| |
specified in the claim already made, but which could have been specified. |
| |
(6) | This section needs to be read with— |
| |
(a) | section 121 (how relief works), |
| 15 |
(b) | section 122 (meaning of “the applicable amount of the loss”), |
| |
(c) | section 123 (meaning of “the loss has a capital allowances connection” |
| |
and “the business has a relevant agricultural connection”), and |
| |
(d) | section 124 (supplementary). |
| |
| 20 |
(1) | This subsection explains how the deductions are to be made. |
| |
| The amount of the applicable amount of the loss to be deducted at any step is |
| |
limited in accordance with section 25(4) and (5). |
| |
| |
| 25 |
| Deduct the applicable amount of the loss in calculating the person’s net income |
| |
for the specified tax year. |
| |
| |
| |
| This step applies if the applicable amount of the loss has not been deducted in |
| 30 |
full and the person makes a separate claim for the other tax year. |
| |
| Deduct the part of the applicable amount of the loss not deducted at Step 1 in |
| |
calculating the person’s net income for the other tax year. |
| |
| |
| 35 |
| If the applicable amount of the loss has not been deducted in full at Steps 1 and |
| |
2, relief is given under section 118 for the part not so deducted. |
| |
(2) | There is a priority rule if— |
| |
(a) | a person makes a claim for property loss relief against general income |
| |
(“the prior claim”) in respect of a loss made in a tax year, |
| 40 |
(b) | the prior claim specifies the next tax year as the one for which the |
| |
deduction is to be made (“the relevant tax year”), |
| |
(c) | the person makes another claim for property loss relief against general |
| |
income in respect of a loss made in the relevant tax year, and |
| |
|
| |
|
| |
|
(d) | that other claim also specifies the relevant tax year as the one for which |
| |
the deduction is to be made. |
| |
(3) | The rule is that priority is given to making deductions under the prior claim. |
| |
122 | Meaning of “the applicable amount of the loss” |
| |
(1) | This section defines “the applicable amount of the loss” for the purposes of |
| 5 |
| |
(2) | “The applicable amount of the loss” is— |
| |
(a) | the amount of the loss, or |
| |
(b) | if less, the amount arising from the relevant connection (see subsections |
| |
| 10 |
| |
(a) | the loss has a capital allowances connection, but |
| |
(b) | the business does not have a relevant agricultural connection, |
| |
| the amount arising from the relevant connection is the amount (“the net capital |
| |
allowances”) by which the capital allowances exceed the charges under CAA |
| 15 |
| |
| |
(a) | the business has a relevant agricultural connection, but |
| |
(b) | the loss does not have a capital allowances connection, |
| |
| the amount arising from the relevant connection is the amount of the allowable |
| 20 |
| |
| |
(a) | the loss has a capital allowances connection, and |
| |
(b) | the business has a relevant agricultural connection, |
| |
| the amount arising from the relevant connection is the sum of the net capital |
| 25 |
allowances and the amount of the allowable agricultural expenses. |
| |
123 | Meaning of “the loss has a capital allowances connection” and “the business |
| |
has a relevant agricultural connection” |
| |
(1) | This section applies for the purposes of sections 120 and 122. |
| |
(2) | The loss has a capital allowances connection if, in calculating the loss— |
| 30 |
(a) | the amount of the capital allowances treated as expenses of the |
| |
| |
(b) | the amount of any charges under CAA 2001 treated as receipts of the |
| |
| |
(3) | The business has a relevant agricultural connection if— |
| 35 |
(a) | the business is carried on in relation to land that consists of or includes |
| |
an agricultural estate, and |
| |
(b) | allowable agricultural expenses deducted in calculating the loss are |
| |
attributable to the estate. |
| |
(4) | “Agricultural estate” means land— |
| 40 |
(a) | which is managed as one estate, and |
| |
(b) | which consists of or includes land occupied wholly or mainly for |
| |
| |
|
| |
|
| |
|
(5) | “Allowable agricultural expenses”, in relation to an agricultural estate, means |
| |
any expenses attributable to the estate which are deductible— |
| |
(a) | in respect of maintenance, repairs, insurance or management of the |
| |
| |
(b) | otherwise than in respect of interest payable on a loan. |
| 5 |
(6) | But expenses attributable to the parts of the estate used wholly for purposes |
| |
other than those of husbandry are to be ignored. |
| |
(7) | And if parts of the estate are used both— |
| |
(a) | for purposes of husbandry, and |
| |
| 10 |
| the expenses in respect of those parts are to be reduced so far as those parts are |
| |
used for the other purposes. |
| |
| |
(1) | A claim for property loss relief against general income must be made on or |
| |
before the first anniversary of the normal self-assessment filing date for the tax |
| 15 |
year specified in the claim. |
| |
(2) | If a loss has previously been carried forward under section 118, the claim must |
| |
be accompanied by the amendments of any return made under— |
| |
(a) | section 8 of TMA 1970, or |
| |
(b) | section 8A of TMA 1970, |
| 20 |
| that are necessary to give effect to section 118(5) (reducing the amount of the |
| |
loss carried forward (if necessary, to nil)). |
| |
Post-cessation property relief |
| |
125 | Post-cessation property relief |
| |
(1) | A person may make a claim for post-cessation property relief if, after |
| 25 |
permanently ceasing to carry on a UK property business (whether carried on |
| |
alone or in partnership)— |
| |
(a) | the person makes a qualifying payment, or |
| |
(b) | a qualifying event occurs in relation to a debt owed to the person, |
| |
| and the payment is made, or the event occurs, within 7 years of that cessation. |
| 30 |
(2) | If the claim is made in respect of a payment, the claim is for the payment to be |
| |
deducted in calculating the person’s net income for the tax year in which the |
| |
payment is made (see Step 2 of the calculation in section 23). |
| |
(3) | If the claim is made in respect of an event, the claim is for the appropriate |
| |
amount of the debt to be deducted in calculating the person’s net income for |
| 35 |
the relevant tax year (see Step 2 of the calculation in section 23). |
| |
(4) | The claim must be made on or before the first anniversary of the normal self- |
| |
assessment filing date for the tax year for which the deduction is to be made. |
| |
| |
(a) | the person is a company within the charge to income tax under Chapter |
| 40 |
3 of Part 3 of ITTOIA 2005 in respect of a UK property business, and |
| |
|
| |
|
| |
|
(b) | the company ceases at any time to be within that tax charge in respect |
| |
| |
| the company is treated for the purposes of this section as permanently ceasing |
| |
to carry on the business at that time. |
| |
(6) | The following provisions apply for the purposes of post-cessation property |
| 5 |
relief as they apply for the purposes of post-cessation trade relief (but as if any |
| |
reference to a trade were to a UK property business)— |
| |
(a) | section 97 (meaning of “qualifying payment”), |
| |
(b) | section 98 (meaning of “qualifying event” etc), |
| |
(c) | section 99 (reduction of relief for unpaid trade expenses), and |
| 10 |
(d) | section 100 (prohibition against double counting). |
| |
126 | Treating excess post-cessation property relief as CGT loss |
| |
A person who cannot deduct all of an amount under a claim for post-cessation |
| |
property relief may be able to treat the unused part as an allowable loss for |
| |
capital gains tax purposes: see sections 261D and 261E of TCGA 1992. |
| 15 |
Furnished holiday accommodation |
| |
127 | UK furnished holiday lettings business treated as trade |
| |
(1) | This section applies if, in a tax year, a person carries on a UK furnished holiday |
| |
| |
(2) | “UK furnished holiday lettings business” means a UK property business which |
| 20 |
consists of, or so far as it includes, the commercial letting of furnished holiday |
| |
accommodation (within the meaning of Chapter 6 of Part 3 of ITTOIA 2005). |
| |
(3) | For the purposes of this Part (but as modified below) the person is treated |
| |
instead as carrying on in the tax year a single trade— |
| |
(a) | which consists of every commercial letting of furnished holiday |
| 25 |
accommodation comprised in the person’s UK furnished holiday |
| |
| |
(b) | the profits of which are chargeable to income tax. |
| |
(4) | Chapter 2 applies as if section 75 (trade leasing allowances given to |
| |
individuals) were omitted. |
| 30 |
(5) | Early trade losses relief is not available to an individual for a loss made in a tax |
| |
year if the individual first let any of the relevant accommodation as furnished |
| |
accommodation more than 3 years before the beginning of the tax year. |
| |
(6) | Accommodation is relevant if the trade that is treated as carried on in the tax |
| |
year consists of or includes the letting of the accommodation. |
| 35 |
(7) | If there is a letting of accommodation only part of which is furnished holiday |
| |
accommodation, just and reasonable apportionments are to be made for the |
| |
purpose of determining what is comprised in the trade treated as carried on. |
| |
|
| |
|
| |
|
| |
Losses in an employment or office |
| |
128 | Employment loss relief against general income |
| |
(1) | A person may make a claim for employment loss relief against general income |
| |
| 5 |
(a) | is in employment or holds an office in a tax year, and |
| |
(b) | makes a loss in the employment or office in the tax year (“the loss- |
| |
| |
(2) | The claim is for the loss to be deducted in calculating the person’s net income— |
| |
(a) | for the loss-making year, |
| 10 |
(b) | for the previous tax year, or |
| |
| |
| (See Step 2 of the calculation in section 23.) |
| |
(3) | If the claim is made in relation to both tax years, the claim must specify the year |
| |
for which a deduction is to be made first. |
| 15 |
(4) | Otherwise the claim must specify either the loss-making year or the previous |
| |
| |
(5) | The claim must be made on or before the first anniversary of the normal self- |
| |
assessment filing date for the loss-making year. |
| |
(6) | Nothing in this section prevents a person who makes a claim specifying a |
| 20 |
particular tax year in respect of a loss from making a further claim specifying |
| |
the other tax year in respect of the unused part of the loss. |
| |
(7) | This Chapter is subject to paragraph 2 of Schedule 1B to TMA 1970 (claims for |
| |
loss relief involving two or more years). |
| |
(8) | This section needs to be read with section 129 (how relief works). |
| 25 |
| |
(1) | This subsection explains how the deductions are to be made. |
| |
| The amount of the loss to be deducted at any step is limited in accordance with |
| |
| |
| 30 |
| |
| Deduct the loss in calculating the person’s net income for the specified tax year. |
| |
| |
| |
| This step applies only if the claim is made in relation to both tax years. |
| 35 |
| Deduct the part of the loss not deducted at Step 1 in calculating the person’s |
| |
net income for the other tax year. |
| |
(2) | There is a priority rule if a person— |
| |
(a) | makes a claim for employment loss relief against general income (“the |
| |
first claim”) in relation to the loss-making year, and |
| 40 |
(b) | makes a separate claim in respect of a loss made in the following tax |
| |
year in relation to the same tax year as the first claim. |
| |
|
| |
|
| |
|
(3) | The rule is that priority is given to making deductions under the first claim. |
| |
(4) | For this purpose a “separate claim” means— |
| |
(a) | a claim for employment loss relief against general income, or |
| |
(b) | a claim for trade loss relief against general income (see sections 64 to |
| |
| 5 |
130 | Treating loss in employment or office as CGT loss |
| |
A person who cannot deduct all of a loss in an employment or office under a |
| |
claim for employment loss relief against general income may be able to treat |
| |
the unused part as an allowable loss for capital gains tax purposes: see sections |
| |
261B and 261C of TCGA 1992. |
| 10 |
| |
Losses on disposal of shares |
| |
Share loss relief against general income |
| |
| |
(1) | An individual is eligible for relief under this Chapter (“share loss relief”) if— |
| 15 |
(a) | the individual incurs an allowable loss for capital gains tax purposes on |
| |
the disposal of any shares in any tax year (“the year of the loss”), and |
| |
(b) | the shares are qualifying shares. |
| |
| This is subject to subsections (3) and (4) and section 136(2). |
| |
(2) | Shares are qualifying shares for the purposes of this Chapter if— |
| 20 |
(a) | EIS relief is attributable to them, or |
| |
(b) | if EIS relief is not attributable to them, they are shares in a qualifying |
| |
trading company which have been subscribed for by the individual. |
| |
(3) | Subsection (1) applies only if the disposal of the shares is— |
| |
(a) | by way of a bargain made at arm’s length, |
| 25 |
(b) | by way of a distribution in the course of dissolving or winding up the |
| |
| |
(c) | a disposal within section 24(1) of TCGA 1992 (entire loss, destruction |
| |
dissipation or extinction of asset), or |
| |
(d) | a deemed disposal under section 24(2) of that Act (claim that value of |
| 30 |
the asset has become negligible). |
| |
(4) | Subsection (1) does not apply to any allowable loss incurred on the disposal |
| |
| |
(a) | the shares are the subject of an exchange or arrangement of the kind |
| |
mentioned in section 135 or 136 of TCGA 1992 (company |
| 35 |
reconstructions etc), and |
| |
(b) | because of section 137 of that Act, the exchange or arrangement |
| |
involves a disposal of the shares. |
| |
|
| |
|