BIM75001 - Trading losses: general matters: introduction
Current year basis of assessment
This page sets out guidance on how the loss relief provisions are to be applied under the ‘current year basis of assessment’.
Years from which the current year basis of assessment rules apply
The 'current year' basis period rules for the assessment of profits taxable under Cases I and II of Schedule D as set out at BIM71000 onwards apply:
- from 1994/95 to all new businesses set up and commenced on or after 6 April 1994, or
- from 1994/95 for any existing business treated as set up or commenced on or after 6 April 1994 by virtue of old ICTA88/S113 (1), or
- from 1997/98 for all other businesses.
Computation of loss
The amount of a trading loss is calculated in the same way and for the same period as a trading profit, disallowing expenditure which is capital, or not wholly and exclusively for business purposes, and so on, (ICTA88/S382 (3)).
When a loss is sustained
A claim to loss relief is allowed where a person has sustained a loss. For guidance on when a loss has been sustained for tax purposes see BIM75050.
Losses and partnerships
- Guidance on partnerships in general is to be found at BIM72000 onwards. In particular BIM72055 explains the rules for sharing of losses.
- Further guidance on the allocation of losses to partners and the application of the current year and previous year bases of assessment rules can be found at BIM72200 onwards.
- Guidance on other income and basis periods for partners with specific reference to losses is to be found at BIM72300 onwards.
- Guidance on the computation of liability and losses for partnerships may also be found at BIM71040.
Trading losses: claims
For general guidance on:
- how claims are to be made BIM75201,
- time limits BIM75210,
- partial claims and priority of claims BIM75215,
- amendments to claims BIM75220,
- late claims BIM75225.
Uncommercial losses
For guidance on:
