Part 4Loss relief
Chapter 7Losses from miscellaneous transactions
Loss relief against miscellaneous income
152Losses from miscellaneous transactions
F11
If in a tax year (“the loss-making year”) a person makes a loss in a relevant transaction, the person may make a claim for loss relief against relevant miscellaneous income.
2
A transaction is a relevant one if, assuming there were profits or other income arising from it—
a
those profits or that other income would be F6income on which income tax is charged under, or by virtue of, a relevant section 1016 provision (“the relevant provision”), and
b
the person would be liable for income tax charged on those profits or that other income.
F32A
A relevant section 1016 provision” means a provision to which section 1016 applies, other than—
a
regulation 17 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001) (treatment of participants in non-reporting funds: charge to tax on disposal of asset), or
b
Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance etc).
3
The claim is for the loss to be deducted in calculating the person's net income for the loss-making year and subsequent tax years (see Step 2 of the calculation in section 23).
4
But a deduction for that purpose is to be made only from the person's F8relevant miscellaneous income.
5
F2 The person's “relevant miscellaneous income is so much of the person's total income as is—
a
income or gains arising from transactions, and
F9b
income on which income tax is charged under, or by virtue of, the relevant provision.
This is subject to subsection (6).
6
If the loss was made by the person as a partner in a partnership, the transactions covered by subsection (5)(a) are limited to transactions entered into by the partnership.
7
F118
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9
This section needs to be read with—
a
section 153 (how relief works),
b
section 154 (transactions in deposit rights),F4...
F5ba
section 154A (anti-avoidance), and
c
section 155 (claims).
C1153How relief works
This section 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 from the F10relevant miscellaneous income for the loss-making year.
Step 2
Deduct from the F10relevant miscellaneous income for the next tax year the amount of the loss not previously deducted.
Step 3
Continue to apply Step 2 in relation to F10relevant miscellaneous income for subsequent tax years until all the loss is deducted.