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HMRC internal manual

Business Income Manual

Partnerships - loss relief restrictions: active LLP members: example

Y becomes an active member of an LLP on 6 April 2011, introducing capital of £100,000 into the LLP on that date. The LLP carries on a trade.

Y’s share of the LLP’s trading losses is as follows, and he claims trade loss relief against general income.

Year ended 5 April 2012 £60,000
Year ended 5 April 2013 £60,000

Y is only entitled to set the losses against his other income or gains as follows:

2011/12 £60,000 (unrelieved capital contribution £40,000)
2012/13 £40,000 (total relief limited to capital contribution of £100,000; unrelieved loss £20,000)

Unless Y makes a further capital contribution in a later year, the unrelieved balance of the loss for 2012/13 (£20,000) will only be available to be carried forward and set against Y’s share of the LLP’s profits from the same trade for later years.

Guidance on giving sideways loss reliefs for unrelieved amounts if further capital contributions are made is at BIM82635.