BIM75005 - Trading losses: general matters: forms of relief


The Taxes Acts provide several different ways in which losses sustained by those carrying on a trade, profession or vocation may be relieved. These are as follows:

a) ICTA88/S380 - against the individual’s general income of the year the loss was sustained or of the previous year, see BIM75410;

b) ICTA88/S381 - against the individual’s general income of the three years before the year the loss was sustained. This only applies where the loss was sustained in the first four tax years in which the trade, profession or vocation was carried on, see BIM75450 onwards;

c) FA91/S72 - against the individual’s capital gains of the year in which the loss was sustained or of the previous year, see BIM75420 onwards;

d) ICTA88/S385 - against later profits from the same trade, profession or vocation, see BIM75500;

e) ICTA88/S386 - against income from a company to which the business which sustained the losses is transferred, see BIM75500;

f) ICTA88/S388 - against profits from the same trade, profession or vocation taxed in the four tax years to cessation. Terminal loss relief is only available for the loss sustained in the final 12 months of trading, see BIM75480 onwards.

  • As regards activities which may have been set up with the primary object of creating artificial losses, see BIM75740.
  • For activities which are not carried on a commercial basis with a view to the realisation of profit, see BIM75700 onwards.
  • Set off of losses for the purposes of Class 4 NIC is covered in the NIC manual.
  • Where losses include capital allowances as an expense, see BIM75730 onwards.