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Limits to loss relief claims against income or capital gains

Posted on 7th March 2022 - Income Tax

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There are a number of tax reliefs available for self-employed taxpayers that make a trading loss. This includes a partners' share of partnership trading losses.

There may also be restrictions if the claimant:

  • worked for less than 10 hours a week on average on commercial activities of the trade
  • is a limited partner or a member of a limited liability partnership
  • has a trade which is carried on wholly overseas
  • has claimed certain capital allowances,
  • has income from oil extraction activities or oil rights

There is also an overall cap on certain income tax reliefs. The cap is set at 25% of income or £50,000, whichever is the greater. There is a separate type of loss relief available for those operating under the cash basis. No loss relief is available if the trade is not run commercially and for profit, for example if a trade is run as a hobby.

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