Final Year Trading Losses - Tax Relief

Ronnie Registered Posts: 20 New contributor 🐸
Can tax relief for 2009/10 final year trading losses be claimed against other income from employment, either in the same or previous tax years? Or can it only be claimed against 3 previous years' trading profits, if any?

The business, a husband/wife partnership, also made a loss in 2008/09, when I claimed relief for the husband against his 2007/08 employment income.

Many thanks.


  • Nilesh Mandvia
    Nilesh Mandvia Registered Posts: 91 Regular contributor ⭐
    Terminal loss

    My understanding is that at ceasing trade you need to calculate terminal loss. The terminal loss relief available is against final three tax year on LIFO basis. This loss is set against the trading income.
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    You have the choice. Final year losses can be set against other income of the current and/or preceding year as usual. If that does not fully utilise the losses to your client's advantage then terminal losses can be carried back as described above.
  • Ronnie
    Ronnie Registered Posts: 20 New contributor 🐸
    Many thanks for clarifying my unsure understanding. The business never made a profit, which is why they decided to cease trading in the fourth tax year, despite still having to repay a hefty loan they took out to purchase the business. As the husband remained employed, I shall make a claim against his employment income.
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