Final Year Trading Losses - Tax Relief

Ronnie

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

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

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

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.