BIM72620 - Computing the amount to assess: Partnerships - loss relief restrictions: Limited partners - example
On 6 April 2005 X joins an existing partnership as a limited partner.
Capital introduced
X introduces the following capital into the partnership:
6 April 2005: £90,000.
6 April 2006: £25,000.
Share of partnership profits and losses
X’s share of the partnership’s trading profits and losses are:
Year ended 5 April 2006: Loss (£140,000).
Year ended 5 April 2007: Profit £60,000.
Drawings
X takes no drawings from the partnership.
Capital contributions
X’s capital contributions for the purposes of loss relief restrictions are:
At 5 April 2006: £90,000.
At 5 April 2007: £175,000 (£90,000 + £25,000 + £60,000 undrawn profits).
Loss relief claims
ICTA88/S117 (now ITA07/S104) restricts relief that may be given against other income to the amount of X’s capital contribution at 5 April 2006 (£90,000). Relief given against other income is restricted to:
| Year | Relief given under | Against other income |
| 2002/03 | ICTA88/S381 | £90,000 |
Losses carried forward
The remaining £50,000 of the £140,000 losses sustained in 2005/06, for which relief cannot be given against X’s other income or gains, can be carried forward under ICTA88/S385 (ITA07/S83 from 6 April 2007) and set against X’s share of the partnership’s trading profits for 2006/07 and later years.
