Income Tax Act 2007

The main rates at which income tax is charged are—

The starting rate, basic rate and higher rate for a tax year are the rates determined as such by Parliament for the tax year.

For other rates at which income tax is charged see—

The dividend ordinary rate is 10%.

The dividend upper rate is 32.5%.

The trust rate is 40%.

The dividend trust rate is 32.5%.

Income tax is charged at the starting rate on an individual’s income up to the starting rate limit.

Income tax is charged at the basic rate on an individual’s income above the starting rate limit and up to the basic rate limit.

Income tax is charged at the higher rate on an individual’s income above the basic rate limit.

This section is subject to— section 12 (income charged at the savings rate), section 13 (income charged at the dividend ordinary and dividend upper rates: individuals), and any other provisions of the Income Tax Acts which provide for income of an individual to be charged at different rates of income tax in some circumstances.

See section 20 for the starting rate limit and the basic rate limit.

Income tax is charged at the basic rate on the income of persons other than individuals.

This section is subject to— section 12 (income charged at the savings rate), section 14 (income charged at the dividend ordinary rate: other persons), Chapters 3 to 6 of Part 9 (which provide for some income of trustees to be charged at the dividend trust rate or at the trust rate), and any other provisions of the Income Tax Acts which provide for income of persons other than individuals to be charged at different rates of income tax in some circumstances.

Income tax is charged at the savings rate on a person’s income which—

This is subject to— Chapters 3 to 6 of Part 9 (which provide for some income of trustees to be charged at the dividend trust rate or at the trust rate), section 504(3) (treatment of income of unauthorised unit trust), and any other provisions of the Income Tax Acts (apart from sections 10 and 11) which provide for income to be charged at different rates of income tax in some circumstances.

Section 16 has effect for determining the extent to which a person’s savings income would otherwise be charged at the basic rate.

Income tax is charged at the dividend ordinary rate on an individual’s income which—

Income tax is charged at the dividend upper rate on an individual’s income which—

Subsections (1) and (2) are subject to any provisions of the Income Tax Acts (apart from section 10) which provide for income to be charged at different rates of income tax in some circumstances.

Section 16 has effect for determining the extent to which an individual’s dividend income would otherwise be charged at the starting, basic or higher rate.

Income tax is charged at the dividend ordinary rate on the income of persons other than individuals which—

This is subject to— Chapters 3 to 6 of Part 9 (which provide for some income of trustees to be charged at the dividend trust rate or at the trust rate), section 504(3) (treatment of income of unauthorised unit trust), and any other provisions of the Income Tax Acts (apart from section 11) which provide for income of persons other than individuals to be charged at different rates of income tax in some circumstances.

This section has effect for determining the rate at which income tax would be charged on a person’s savings or dividend income apart from sections 12 and 13.

It also has effect for all other income tax purposes except for the purposes of—

If a person has savings income but no dividend income, the savings income is treated as the highest part of the person’s total income.

If a person has dividend income but no savings income, the dividend income is treated as the highest part of the person’s total income.

If a person has both savings income and dividend income—

See section 1012 for the relationship between—

References in this section to dividend income do not include dividend income which is relevant foreign income charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).

This section applies if income tax at the basic rate has been paid on income on which income tax is chargeable at the starting or savings rate.

If a claim is made, any necessary repayment of tax must be made.

This section applies for the purposes of the Income Tax Acts.

“Savings income” is income—

Income is within this subsection if it is—

Income is within this subsection if—

This section applies for the purposes of the Income Tax Acts.

“Dividend income” is income which is—

In subsection (2) “relevant foreign distribution” means a distribution of a non-UK resident company which—

The starting rate limit is £2,150.

The basic rate limit is £33,300.

The basic rate limit is increased in some circumstances: see—

This section applies if the retail prices index for the September before the start of a tax year is higher than it was for the previous September.

The starting rate limit for the tax year is the amount found as follows. Step 1 Increase the starting rate limit for the previous tax year by the same percentage as the percentage increase in the retail prices index. Step 2 If the result of Step 1 is a multiple of £10, it is the starting rate limit for the tax year. If the result of Step 1 is not a multiple of £10, round it up to the nearest amount which is a multiple of £10. That amount is the starting rate limit for the tax year.

The basic rate limit for the tax year is the amount found as follows. Step 1 Increase the basic rate limit for the previous tax year by the same percentage as the percentage increase in the retail prices index. Step 2 If the result of Step 1 is a multiple of £100, it is the basic rate limit for the tax year. If the result of Step 1 is not a multiple of £100, round it up to the nearest amount which is a multiple of £100. That amount is the basic rate limit for the tax year.

Subsections (2) and (3) do not require a change to be made in the amounts deductible or repayable under PAYE regulations during the period beginning on 6 April and ending on 17 May in the tax year.

Before the start of the tax year the Treasury must make an order replacing the amounts specified in section 20 with the amounts which, as a result of subsections (2) and (3), are the starting rate limit and the basic rate limit for the tax year.

In this Chapter—

An allowance under this Chapter is given effect at Step 3 of the calculation in section 23.

An individual who makes a claim is entitled to a personal allowance of £7,280 for a tax year if the individual—

For an individual whose adjusted net income for the tax year exceeds £20,100, the allowance under subsection (1)—

For the meaning of “adjusted net income” see section 58.

An individual who makes a claim is entitled to a personal allowance of £7,420 for a tax year if the individual—

For an individual whose adjusted net income for the tax year exceeds £20,100, the allowance under subsection (1)—

For the meaning of “adjusted net income” see section 58.

An individual who makes a claim is entitled to a blind person’s allowance of £1,660 for a tax year if the individual—

The first condition is that the individual is registered as a blind person in a register kept under section 29 of the National Assistance Act 1948 (c. 29) (registers kept by local authorities in England and Wales).

The second condition is that—

If an individual who is entitled to a blind person’s allowance for a particular tax year— the individual is treated as having met the first condition for the whole of the preceding tax year.

This section applies to an individual who is entitled to a blind person’s allowance under section 38 for a tax year if—

If— the individual’s spouse or civil partner is entitled to an allowance for the tax year equal to the amount of the excess.

The individual’s remaining relievable income is the amount found by—

An election under section 39—

If an individual makes an election for a tax year under section 39 the individual is treated as also giving notice under section 51(4) that section 51(1) (tax reductions for married couples and civil partners: transfer of unused relief) is to apply for the tax year.

Any allowance to which an individual is entitled under this Chapter for any tax year, including the tax year in which the individual dies, is given in full.

If an individual was due to reach the age of 65 in a tax year, but dies in the tax year before reaching that age, the individual is treated for the purposes of section 36 as having reached the age of 65 in the tax year.

If an individual was due to reach the age of 75 in a tax year, but dies in the tax year before reaching that age, the individual is treated for the purposes of sections 36 and 37 as having reached the age of 75 in the tax year.

This Chapter contains provisions about entitlement to tax reductions in a case where a party to a marriage or civil partnership was born before 6 April 1935.

Individuals are entitled to tax reductions under the following provisions of this Chapter—

The tax reductions under sections 45 to 49 are subject to section 54 (tax reductions in the year of marriage or entry into civil partnership).

A tax reduction under this Chapter is given effect at Step 6 of the calculation in section 23.

In this Chapter “an election for the new rules to apply” means an election made by a husband and wife who got married before 5 December 2005 for the new rules to apply to them instead of the old rules.

In subsection (1)—

An election for the new rules to apply—

If a man— he is entitled to a tax reduction for the tax year of 10% of the amount specified in subsection (3)(a) or (b) (as applicable).

The conditions are that—

The amount is—

For a man whose adjusted net income for the tax year exceeds £20,100, the amounts specified in subsection (3) are reduced by—

But subsection (4) does not reduce the amounts specified in subsection (3) below the minimum amount.

For the meaning of “adjusted net income” see section 58.

If an individual— the individual is entitled to a tax reduction for the tax year of 10% of the amount specified in subsection (3)(a) or (b) (as applicable).

The conditions are that—

The amount is—

For an individual whose adjusted net income for the tax year exceeds £20,100, the amounts specified in subsection (3) are reduced by—

But subsection (4) does not reduce the amounts specified in subsection (3) below the minimum amount.

An election under subsection (2)(e)—

For the meaning of “adjusted net income” see section 58.

If— the individual is entitled to a tax reduction for that tax year of 10% of half the minimum amount.

The conditions are that the individual—

If an individual is entitled to a tax reduction under subsection (1), the tax reduction to which the individual’s spouse or civil partner is entitled under section 45 or 46 is calculated for the tax year as if the appropriate amount were reduced by half the minimum amount.

In subsection (3) “the appropriate amount” means—

If— the individual is entitled to a tax reduction for that tax year of 10% of the minimum amount.

The conditions are that—

If an individual is entitled to a tax reduction under subsection (1), the tax reduction to which the individual’s spouse or civil partner is entitled under section 45 or 46 is calculated for the tax year as if the appropriate amount were reduced by the minimum amount.

In subsection (3) “the appropriate amount” means—

If an individual whose spouse or civil partner is entitled under section 48(1) to a tax reduction for a tax year— the individual is entitled to a tax reduction for that tax year of 10% of half the minimum amount (in addition to any tax reduction to which the individual is entitled under section 45 or 46).

The amount of the tax reduction to which the individual’s spouse or civil partner is entitled under section 48(1) for that tax year is 10% of half the minimum amount (instead of 10% of the minimum amount).

This section applies to elections under sections 47 to 49.

An election—

An election—

In subsection (3), “appropriate notice” means notice given to an officer of Revenue and Customs by the individual or (in the case of a joint election) individuals concerned that it is intended to make the election.

An election may be withdrawn only by—

If an election is withdrawn under subsection (5)(a), the withdrawal does not have effect until the tax year after the one in which the notice is given.

A notice under subsection (5)(a)—

If— the individual is entitled to a tax reduction for that tax year equal to the unused part of the spouse or civil partner’s MCA tax reductions.

The spouse or civil partner’s MCA tax reductions are the sum of—

The unused part of the spouse or civil partner’s MCA tax reductions is equal to—

The conditions are that—

The tax reduction to which the individual is entitled under subsection (1) is in addition to any tax reduction to which the individual is entitled under section 47 or 48.

The meaning of “comparable tax liability” is given in section 53.

If— the individual is entitled to a tax reduction for that tax year equal to the unused part of the spouse or civil partner’s tax reduction.

The unused part of the spouse or civil partner’s tax reduction is equal to—

The conditions are that—

The tax reduction to which the individual is entitled under subsection (1) is in addition to any tax reduction to which the individual is entitled under section 45, 46 or 49.

The meaning of “comparable tax liability” is given in section 53.

For the purposes of sections 51 and 52, the comparable tax liability of an individual is the amount of the individual’s tax left after Step 6 of the calculation in section 23 for the tax year, making that calculation with the modifications set out in subsections (2) and (3).

In making that calculation, do not deduct any tax reduction under—

If the individual’s entitlement to a tax reduction under this Chapter is extinguished under section 423(4) (gift aid: restriction of reliefs) to any extent, deduct from the amount calculated in accordance with subsections (1) and (2) the amount by which the tax reduction is reduced.

A notice under section 51 or 52—

For the purposes of this section a person is treated as being entitled to a tax reduction under section 788 of ICTA if the person is entitled to credit against income tax under double taxation arrangements.

Subsection (2) applies if an individual—

In calculating the amount of the tax reduction (if any) to which the individual is entitled under that section, the amounts specified in section 45(3) or 46(3) (as applicable) are reduced by one twelfth for each month of the tax year which is a month ending before the date on which—

The reference in subsection (2) to the amounts specified in section 45(3) or 46(3) is to those amounts after any reduction under section 45(4) or 46(4).

But if— subsection (2) applies only if the claim is in respect of the later marriage or civil partnership.

If a claim under section 47, 48 or 49 is for the tax year in which the marriage takes place, or the civil partnership is formed, the references in those sections to the minimum amount are to be read as references to the minimum amount reduced by one twelfth for each month of the tax year which is a month ending before the date on which—

In this section, “month” means a period beginning with the sixth day of a calendar month and ending with the fifth day of the next calendar month.

An individual is not entitled to more than one tax reduction under sections 45 to 48 for a tax year (regardless of whether the individual is a party to more than one marriage or civil partnership in the tax year).

For the purposes of sections 45 and 46 an individual is treated as having reached the age of 75 in a tax year if the individual was due to reach the age of 75 in the tax year, but dies in the tax year before reaching that age.

Unless this Chapter provides otherwise, a tax reduction to which an individual is entitled under this Chapter for a tax year, including the tax year in which the individual dies, is given in full.

This Chapter—

This Chapter is subject to paragraph 2 of Schedule 1B to TMA 1970 (claims for loss relief involving two or more years).

For a rule treating an individual as starting or permanently ceasing to carry on a trade, profession or vocation for income tax purposes (including those of this Part), see—

For the purposes of this Chapter sideways relief is—

References in this Chapter to a firm are to be read in the same way as references to a firm in Part 9 of ITTOIA 2005 (which contains special provision about partnerships).

This section applies if a trade, profession or vocation is carried on by a person otherwise than as a partner in a firm.

For the purposes of this Chapter any reference to the person making a loss in the trade, profession or vocation in a tax year is to the person making a loss in the trade, profession or vocation in the basis period for the tax year.

This section is subject to section 70 (restriction on trade loss relief against general income in case of farming or market gardening).

For the rules about basis periods, see Chapter 15 of Part 2 of ITTOIA 2005.

In particular, see the rule in section 206 of ITTOIA 2005 (restriction on bringing losses into account twice).

This section applies if a trade or profession is carried on by a person as a partner in a firm.

Any reference to a person making a loss in a trade or profession in a tax year is to the partner making a loss in the partner’s notional trade in the basis period for the tax year (as to which, see sections 852 and 853 of ITTOIA 2005).

Further—

In this section a partner’s “notional trade” has the same meaning as in Part 9 of ITTOIA 2005.

This section applies for the purposes of this Chapter and Chapter 3, except that it does not apply for the purposes of section 67(2) or sections 68 to 70 (restriction on trade loss relief against general income in case of farming or market gardening).

A person may make a claim for trade loss relief against general income if the person—

The claim is for the loss to be deducted in calculating the person’s net income— (See Step 2 of the calculation in section 23.)

If the claim is made in relation to both tax years, the claim must specify the tax year for which a deduction is to be made first.

Otherwise the claim must specify either the loss-making year or the previous tax year.

The claim must be made on or before the first anniversary of the normal self-assessment filing date for the loss-making year.

Nothing in this section prevents a person who makes a claim specifying a particular tax year in respect of a loss from making a further claim specifying the other tax year in respect of the unused part of the loss.

This section applies to professions and vocations as it applies to trades.

This section needs to be read with—

This subsection explains how the deductions are to be made. The amount of the loss to be deducted at any step is limited in accordance with section 25(4) and (5). Step 1 Deduct the loss in calculating the person’s net income for the specified tax year. Step 2 This step applies only if the claim is made in relation to both tax years. Deduct the part of the loss not deducted at Step 1 in calculating the person’s net income for the other tax year. Other claims If the loss has not been deducted in full at Steps 1 and 2, the person may use the part not so deducted in giving effect to any other relief under this Chapter (depending on the terms of the relief).

There is a priority rule if a person—

The rule is that priority is given to making deductions under the first claim.

For this purpose a “separate claim” means—

Trade loss relief against general income for a loss made in a trade in a tax year is not available unless the trade is commercial.

The trade is commercial if it is carried on throughout the basis period for the tax year—

If at any time a trade is carried on so as to afford a reasonable expectation of profit, it is treated as carried on at that time with a view to the realisation of profits.

If the trade forms part of a larger undertaking, references to profits of the trade are to be read as references to profits of the undertaking as a whole.

If there is a change in the basis period in the way in which the trade is carried on, the trade is treated as carried on throughout the basis period in the way in which it is carried on by the end of the basis period.

The restriction imposed by this section does not apply to a loss made in the exercise of functions conferred by or under an Act.

This section applies to professions and vocations as it applies to trades.

This section applies if a loss is made in a trade of farming or market gardening in a tax year (“the current tax year”).

Trade loss relief against general income is not available for the loss if a loss, calculated without regard to capital allowances, was made in the trade in each of the previous 5 tax years (see section 70).

This section does not prevent relief for the loss from being given if—

This section explains how the farming or market gardening activities (“the activities”) meet the reasonable expectation of profit test for the purposes of section 67.

The test is decided by reference to the expectations of a competent farmer or market gardener (a “competent person”) carrying on the activities.

The test is met if—

In determining whether a competent person carrying on the activities in the current tax year would reasonably expect future profits regard must be had to—

“The prior period of loss” means—

This section applies for the purposes of sections 67 and 68.

If there is a change in the persons carrying on a trade which involves all of the persons carrying it on before the change permanently ceasing to carry it on— at the date of the change (but see subsections (3) to (6)).

A husband and wife are treated as the same person.

Persons who are civil partners of each other are treated as the same person.

A husband or wife is treated as the same person as—

A person’s civil partner is treated as the same person as—

“Control” has the same meaning as in Part 11 of ICTA (see section 416 of that Act).

This section applies for the purposes of sections 67(2) and 68(5) in determining whether a loss, calculated without regard to capital allowances, is made in the trade in any tax year before the current tax year.

The loss made in a tax year before the current tax year is not taken to be the loss (if any) made in the basis period for the tax year, but is instead the loss made in the tax year itself.

This loss is determined by reference to— or by reference to both.

If— any of the steps in section 203(2) of ITTOIA 2005 may be taken to arrive at the profits or losses made in a tax year. For this purpose references in section 203(2) of that Act to basis periods are read as references to tax years and references to periods of account are read as including accounting periods.

The steps must be taken in accordance with section 203(3) or (4) of ITTOIA 2005.

A loss in a trade is calculated without regard to capital allowances by ignoring—

An individual may make a claim for early trade losses relief if the individual makes a loss in a trade—

The claim is for the loss to be deducted in calculating the individual’s net income for the 3 tax years before the one in which the loss is made (see Step 2 of the calculation in section 23).

The claim must be made on or before the first anniversary of the normal self-assessment filing date for the tax year in which the loss is made.

This section applies to professions and vocations as it applies to trades.

This section needs to be read with—

Early trade losses relief for a loss made by an individual in a trade in a tax year is not available unless the trade is commercial.

The trade is commercial if it is carried on throughout the basis period for the tax year—

If the trade forms part of a larger undertaking, the reference to profits of the trade is to be read as a reference to profits of the undertaking as a whole.

Early trade losses relief for a loss made by an individual is not available if—

The relevant 4 year period comprises—

This section applies to professions and vocations as it applies to trades.

Sideways relief is not available to an individual for so much of a loss as derives from a trade leasing allowance unless the individual meets the time commitment test.

A trade leasing allowance is an allowance made under Part 2 of CAA 2001 in respect of—

An asset is fee-producing if payments in the nature of— are to arise from rights granted by the individual in connection with the asset.

To meet the time commitment test conditions A and B must be met.

Condition A is that the individual must carry on the trade for a continuous period of at least 6 months beginning or ending in the basis period for the tax year in which the loss was made (“the loss-making basis period”).

Condition B is that substantially the whole of the individual’s time must be given to carrying on the trade—

This section applies if—

It does not matter—

For the purposes of this section—

This section applies if—

A qualifying activity is a relevant one if—

An asset is a relevant one if, after the time when the expenditure was incurred, the asset was transferred by the individual—

Arrangements are within this subsection if as a result of them— that might be expected to arise to the individual from the transaction under which the expenditure was incurred is the obtaining of a reduction in tax liability by means of sideways relief.

It does not matter when the arrangements were made.

References to making arrangements include effecting schemes.

If relief is given in a case to which section 75 or 76 applies, the relief is withdrawn by the making of an assessment to income tax under this section.

Expressions which are used— have the same meaning in those sections as in that Part.

This section applies if—

Sideways relief for the loss is not to be given against the person’s ring fence income except so far as the loss arises from oil extraction activities or oil rights.

“Oil extraction activities” and “oil rights” have the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502 of that Act).

This section applies if—

Sideways relief is not available for the loss.

Arrangements are within this subsection if as a result of them— that might be expected to arise to the person from the person’s interest in the firm is the obtaining of a reduction in tax liability by means of sideways relief.

It does not matter whether the arrangements were made in the partnership agreement or in any other way.

References to making arrangements include effecting schemes.

If relief is given in a case to which this section applies, the relief is withdrawn by the making of an assessment to income tax under this section.

“Commodity futures” means commodity futures that are for the time being dealt in on a recognised futures exchange (within the meaning of ITTOIA 2005, see section 558(3) of that Act).

A person may make a claim for carry-forward trade loss relief if—

The claim is for the part of the loss for which relief has not been given under any such provision (“the unrelieved loss”) to be deducted in calculating the person’s net income for subsequent tax years (see Step 2 of the calculation in section 23).

But a deduction for that purpose is to be made only from profits of the trade.

In calculating a person’s net income for a tax year, deductions under this section from the profits of a trade are to be made before deductions of any other reliefs from those profits.

This section applies to professions and vocations as it applies to trades (and section 84 is to be read accordingly).

This section needs to be read with—

This section applies if carry-forward trade loss relief cannot be fully given in relation to the profits of a trade of a tax year because (apart from this section) there are no profits, or insufficient profits, of the trade of the tax year.

For the purposes of the relief any interest or dividends for the tax year that relate to the trade are treated as profits of the trade of the tax year.

Interest or dividends for the tax year relate to the trade if they—

This section applies if—

For the purposes of carry-forward trade loss relief, the income so derived is treated as—

The tax year in which the transfer is made is a relevant one if— throughout the period beginning with the date of the transfer and ending with the next 5 April.

Otherwise a tax year is a relevant one if— throughout the tax year.

The income derived from the company may be by way of dividends on the shares or otherwise.

This section applies to businesses which are not trades as it applies to trades.

This section applies if—

For the purposes of carry-forward trade loss relief for the loss, the person may treat profits from the other activities in a subsequent tax year as if they were profits of the separate trade (despite section 16 of ITTOIA 2005).

This section applies if—

For the purposes of carry-forward trade loss relief, the amount for which relief has not been given may be carried forward to subsequent tax years as if it were a loss made in the trade.

This section applies to professions and vocations as it applies to trades.

A person may make a claim for terminal trade loss relief if the person—

The claim is for the total amount of terminal losses made in the trade by the person (“the relievable loss”) to be deducted in calculating the person’s net income for the final tax year and the 3 previous tax years (see Step 2 of the calculation in section 23).

But a deduction for that purpose is to be made only from profits of the trade.

This section applies to professions and vocations as it applies to trades (and sections 90 and 91 are to be read accordingly).

This section needs to be read with—

Each of the following is a terminal loss made in the trade—

The profit or loss of a period mentioned in subsection (1)(a) or (b) (a “terminal loss period”) is determined by reference to the profits or losses of periods of account of the trade (calculated for income tax purposes).

If no period of account coincides with a terminal loss period, any of the following steps may be taken if they are necessary in order to arrive at the profit or loss of the terminal loss period—

Section 203(3) and (4) of ITTOIA 2005 applies for the purposes of subsection (3) as it applies for the purposes of section 203(2) of that Act.

If as a result of section 205 of ITTOIA 2005 a deduction is allowed for overlap profit in calculating the profits of the trade of the final tax year, that deduction is to be made in calculating the loss (if any) mentioned in subsection (1)(a) (and is therefore irrelevant for the purposes of subsection (1)(b)).

In the case of a notional trade carried on by a partner in a firm—

This section applies if terminal trade loss relief cannot be fully given in relation to the profits of a trade of a tax year because (apart from this section) there are no profits, or insufficient profits, of the trade of the tax year.

For the purposes of the relief any interest or dividends for the tax year that relate to the trade are treated as profits of the trade of the tax year.

Interest or dividends for the tax year relate to the trade if they—

This section applies if—

Terminal trade loss relief must be given before relief under section 355 of CAA 2001.

In giving effect to the terminal trade loss relief, the balancing allowance is to be ignored.

“Mineral extraction trade” has the same meaning as in Part 5 of CAA 2001 (see section 394 of that Act).

This section applies if—

For the purposes of terminal trade loss relief, the amount for which relief has not been given may be treated as a loss made in the trade at the date of payment.

This section applies to professions and vocations as it applies to trades.

This section applies if a person—

In that case—

“Trade income relief” means—

“Qualifying foreign income” means—

“Qualifying foreign trade income” means the profits of any trade, profession or vocation carried on wholly outside the United Kingdom.

But “qualifying foreign income” and “qualifying foreign trade income” do not include any income which is charged to income tax in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).

A person may make a claim for post-cessation trade relief if, after permanently ceasing to carry on a trade— and the payment is made, or the event occurs, within 7 years of that cessation.

If the claim is made in respect of a payment, the claim is for the payment to be deducted in calculating the person’s net income for the tax year in which the payment is made (see Step 2 of the calculation in section 23).

If the claim is made in respect of an event, the claim is for the appropriate amount of the debt to be deducted in calculating the person’s net income for the relevant tax year (see Step 2 of the calculation in section 23).

The claim must be made on or before the first anniversary of the normal self-assessment filing date for the tax year for which the deduction is to be made.

If— the company is treated for the purposes of this section as permanently ceasing to carry on the trade at that time.

This section applies to professions and vocations as it applies to trades (and sections 97 and 98 are to be read accordingly).

This section needs to be read with—

For the purposes of section 96 a person makes a “qualifying payment” after permanently ceasing to carry on a trade if the person makes a payment wholly and exclusively for any of purposes A to D.

A payment is made for purpose A if it is made—

A payment is made for purpose B if it is made in meeting the expenses of legal or other professional services in connection with a claim (a “claim about defects”) that—

A payment is made for purpose C if it is made in insuring—

A payment is made for purpose D if it is made for the purpose of collecting a debt which was brought into account in calculating the profits of the trade.

This section explains for the purposes of section 96 what is meant by—

A qualifying event occurs in relation to a debt owed to the person if— The event occurs when the debt is released.

The appropriate amount of the debt to be deducted is—

The relevant tax year is the tax year in which the debt is released.

A qualifying event also occurs in relation to a debt owed to the person if— The event occurs when the debt proves to be bad.

The appropriate amount of the debt to be deducted is—

The relevant tax year is the tax year specified in the claim.

The person making the claim may specify— but, if the person has previously made a claim specifying a tax year in respect of the debt, the person may not specify another tax year in respect of it.

This section applies for the purposes of post-cessation trade relief in respect of a person’s trade if a deduction was made in calculating the profits of the trade for an expense not actually paid (an “unpaid expense”).

The amount of the person’s relief for a tax year is reduced (but not below nil) by—

But any unpaid expense which is taken into account in reducing the amount of the person’s relief for a tax year is left out of account in making reductions for subsequent tax years.

If the person actually pays an amount in respect of an unpaid expense taken into account in reducing the amount of the person’s relief, the person is treated as making a qualifying payment for the purposes of section 96.

The amount of the qualifying payment is—

This section applies to professions and vocations as it applies to trades.

Post-cessation trade relief is not available for an amount for which relief is given, or is available, under any other provision of the Income Tax Acts.

For this purpose—

This Chapter restricts the amount of relief that may be given for any loss made by an individual in a trade carried on by the individual as—

This Chapter also restricts the amount of relief that may be given for any loss made by an individual in a trade carried on by the individual as a partner in a firm if the trade consists of or includes the exploitation of films (see sections 115 and 116).

This Chapter needs to be read with sections 791 to 795 (income tax charge recovering excess relief for losses made by individuals carrying on a trade in partnership).

See also—

For the purposes of this Chapter sideways relief is—

For the purposes of this Chapter—

References in this Chapter to a firm are to be read in the same way as references to a firm in Part 9 of ITTOIA 2005 (which contains special provision about partnerships).

This section applies if—

There is a restriction on the amount of relief within subsection (3) which may be given to the individual for the loss.

The relief within this subsection is—

The restriction is that— must not exceed the individual’s contribution to the firm as at the end of the basis period for the relevant tax year (see section 105).

“Relevant relief” means sideways relief or capital gains relief given to the individual for—

“The total amount of recovered relief” means the total amount of income treated as received by the individual under section 792 (recovery of excess relief) as a result of the application of that section in relation to claims for relief for losses made by the individual in the relevant trade.

If the firm is carrying on, or has carried on, other trades apart from the relevant trade, for the purpose of determining the total amount of all other relevant relief and the total amount of recovered relief—

For the purposes of section 104 the individual’s contribution to the firm is the sum of amounts A and B.

Amount A is the amount which the individual has contributed to the firm as capital less so much of that amount (if any) as is within subsection (4).

In particular, the individual’s share of any profits of the firm is to be included in the amount which the individual has contributed to the firm as capital so far as that share has been added to the firm’s capital.

An amount of capital is within this subsection if it is an amount which—

In subsection (4) any reference to drawing out or receiving back an amount is to doing so directly or indirectly but does not include drawing out or receiving back an amount which, because of its being drawn out or received back, is chargeable to income tax as profits of a trade.

Amount B is the amount of the individual’s total share of profits within subsection (7) except so far as—

Profits are within this subsection if they are from the relevant trade.

In determining the amount of the individual’s total share of profits within subsection (7) ignore the individual’s share of any losses from the relevant trade which would (apart from this subsection) reduce that amount.

In subsections (3), (7) and (8) any reference to profits or losses are to profits or losses calculated in accordance with generally accepted accounting practice (before any adjustment required or authorised by law in calculating profits or losses for income tax purposes).

If the firm is carrying on, or has carried on, other trades apart from the relevant trade, subsections (7) and (8) have effect as if references to the relevant trade were references to the relevant trade or any of the other trades.

This section needs to be read with any regulations made under section 114 (specified amounts to be excluded in calculating the individual’s contribution to the firm for the purposes of section 104).

In this Chapter “limited partner” means an individual who carries on a trade—

An individual in substance acts as a limited partner in relation to a trade if the individual—

The condition referred to in subsection (1)(c) is that—

In the case of an individual who is a limited partner as a result of subsection (1)(c), references in this Chapter to the individual’s firm are to be read as references to the relationship between the individual and the other persons mentioned in subsection (3)(a).

This section applies if—

But if the relevant tax year is an early tax year during which the individual carries on the relevant trade as a non-active partner (see section 112)—

There is a restriction on the amount of relief within subsection (4) which may be given to the individual for the loss.

The relief within this subsection is—

The restriction is that— must not exceed the individual’s contribution to the LLP as at the end of the basis period for the relevant tax year (see section 108).

“Relevant relief” means sideways relief or capital gains relief given to the individual for—

“The total amount of recovered relief” means the total amount of income treated as received by the individual under section 792 (recovery of excess relief) as a result of the application of that section in relation to claims for relief for losses made by the individual in the relevant trade.

If the LLP is carrying on, or has carried on, other trades apart from the relevant trade, for the purpose of determining the total amount of all other relevant relief and the total amount of recovered relief—

For the purposes of section 107 the individual’s contribution to the LLP at any time (“the relevant time”) is the sum of amounts A and B.

Amount A is the amount which the individual has contributed to the LLP as capital less so much of that amount (if any) as is within subsection (5).

In particular, the individual’s share of any profits of the LLP is to be included in the amount which the individual has contributed to the LLP as capital so far as that share has been added to the LLP’s capital.

In subsection (3) the reference to profits is to profits calculated in accordance with generally accepted accounting practice (before any adjustment required or authorised by law in calculating profits for income tax purposes).

An amount of capital is within this subsection if it is an amount which—

In subsection (5) any reference to drawing out or receiving back an amount is to doing so directly or indirectly but does not include drawing out or receiving back an amount which, because of its being drawn out or received back, is chargeable to income tax as profits of a trade.

Amount B is the amount of the individual’s liability on a winding up of the LLP so far as that amount is not included in amount A.

For the purposes of subsection (7) the amount of the individual’s liability on a winding up of the LLP is the amount which—

This section needs to be read with any regulations made under section 114 (specified amounts to be excluded in calculating the individual’s contribution to the LLP for the purposes of section 107).

This section applies for the purpose of determining an individual’s entitlement to sideways relief and capital gains relief if—

So far as they are not excluded by subsection (3), the amounts of loss mentioned in subsection (1)(b) are treated as having been made in the current tax year.

An amount of loss is excluded so far as—