BIM75420 - Trading losses: types of relief: relief against chargeable gains

FA91/S72 extends relief for losses incurred by a person (individual, partner or trustee) in carrying on a trade, profession, vocation or employment (in relation to employment see EIM31655 and BIM75240) to include a set-off against chargeable gains. The relief applies to losses for the tax year 1991-92 and subsequent years.

A person who incurs a loss and claims relief under ICTA88/S380, but who does not have enough income to offset that loss in full, can have the excess treated as a capital loss to the extent that there are chargeable gains for the year against which the loss is to be relieved.

For the purposes of this legislation, chargeable gains are CG less losses (including capital losses for the same year and capital losses brought forward) without distinguishing between business and non-business assets, but disregarding taper relief and the CG annual exempt amount (FA91/S74 (4)). The relief operates either upon a separate claim under FA91/S72 from the ICTA88/S380 claim, or the ICTA88/S380 claim must make it clear that it is also made under FA91/S72.

Where the loss is claimed under ICTA88/S380 (1) (b), see BIM75205 for how relief is given.