ITSA Loss Relief Principles

What section of ITA 2007 does Terminal Loss relief come under?

s.89

How does Terminal Loss Relief work?

Where losses arising in the final 12 months of trading can be carried back against trading profits of the previous 3 tax years, losses are applied beginning with the most recent year. Relief applies against trading income, not total income.

What is the time limit for claiming Terminal Loss Relief (s.89)?

Within 4 years from end of tax year the claim relates to.

How is element 1 of Terminal Loss relief calculated

The loss (if any) made from 6 April in the final year to the cessation date. Then add any overlap relief.

How is element 2 of Terminal Loss relief calculated

The loss (if any) made in the time period beginning 12 months before cessation and ending 5 April of the second last tax year. This will likely need apportioned from the declared profit/loss from the figures from the period of account.