Income Tax Act 2007 (c. 3)

Part 4 U.K. Loss relief

Chapter 2 U.K. Trade losses

Restriction on relief for “hobby” farming or market gardening U.K.

70 Determining losses in previous tax years U.K.

(1) 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.

F1 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) [F2 The loss] is determined by reference to—

(a) the profits or losses of periods of account of the trade (calculated for income tax purposes, but without regard to capital allowances), or

(b) if (as a result of section 69) a person claiming the relief is treated as the same person as a company within the charge to corporation tax, the profits or losses of the company's accounting periods (calculated for corporation tax purposes, but without regard to capital allowances),

or by reference to both.

(4) If—

(a) a period of account does not coincide with a tax year, or

(b) an accounting period does not coincide with a tax year,

any of the steps in section [F3 7A(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 F4 ... to periods of account are read as including accounting periods.

(5) The steps must be taken in accordance with section [F5 7A(3) or (4)] of ITTOIA 2005.

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

(a) the allowances treated as expenses of the trade under CAA 2001, and

(b) the charges treated as receipts of the trade under that Act.

Textual Amendments

F1 S. 70(2) omitted (with effect in accordance with Sch. 1 para. 61(1)(2) of the amending Act) by virtue of Finance Act 2022 (c. 3), Sch. 1 para. 43(2)

F2 Words in s. 70(3) substituted (with effect in accordance with Sch. 1 para. 61(1)(2) of the amending Act) by Finance Act 2022 (c. 3), Sch. 1 para. 43(3)

F3 Word in s. 70(4) substituted (with effect in accordance with Sch. 1 para. 61(1)(2) of the amending Act) by Finance Act 2022 (c. 3), Sch. 1 para. 43(4)(a)

F4 Words in s. 70(4) omitted (with effect in accordance with Sch. 1 para. 61(1)(2) of the amending Act) by virtue of Finance Act 2022 (c. 3), Sch. 1 para. 43(4)(b)

F5 Words in s. 70(5) substituted (with effect in accordance with Sch. 1 para. 61(1)(2) of the amending Act) by Finance Act 2022 (c. 3), Sch. 1 para. 43(5)

Modifications etc. (not altering text)

C1 Ss. 66-70 applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 6 para. 1(11)(a)

C2 Ss. 66-70 applied (10.6.2021) by Finance Act 2021 (c. 26), Sch. 2 para. 3(1)(a)

C3 S. 70(2)(3)(a)(4)(a)(5) applied (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 51(4), 1184(1) (with Sch. 2)