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HMRC internal manual

Business Income Manual

Partnerships - loss relief restrictions: LLP members: unrelieved amounts

S109, S113 Income Tax Act 2007

A member of an LLP whose sideways loss relief in an earlier tax year has been restricted to their capital contribution may obtain relief for ‘unrelieved losses’ if they make a further capital contribution.

There are similar rules for the carry forward of unrelieved losses by non-active general partners, see BIM82650.

There are no comparable provisions relating to unrelieved losses of limited partners for which relief has been restricted.

Calculating unrelieved losses

Unrelieved losses in any tax year are:

  • the total of any losses for previous years which the LLP member has not been able to set off against their total income or gains because of a restriction made by reference to the member’s capital contribution,


  • any amounts for which relief has been given in that or any earlier year under any provision of the Income Tax Acts (or would have been given if a claim had been made).

Losses restricted by the £25,000 annual limit, which applies to non-active LLP members from 2 March 2007, are not unrelieved losses for this purpose and so can only be carried forward and set against future profits from the same trade. Guidance on the annual limit is at BIM82611.

Giving relief for unrelieved losses

The LLP member is entitled to relief for the unrelieved loss in the later tax year in which the further capital contribution is made (provided that at the time the further contribution is made they are still a member of the LLP) as if:

  • any loss made by the member in that later tax year was increased by an amount equal to the unrelieved loss, or
  • if no loss is made, a loss of that amount were made.

The amount of the additional relief given in respect of the unrelieved loss for the later tax year should not exceed the further capital contribution made by the LLP member in that year. If there still remains a balance of unrelieved loss, further relief may be due for a later tax year if a further capital contribution is made in that later year.

If the individual is a non-active member of the LLP, the £25,000 annual limit for sideways loss relief will apply to an unrelieved loss treated as a loss made in a later tax year, in the same way as it would apply to an actual loss made by the member in that later tax year.


Y becomes an active member of a LLP on 6 April 2010 and introduces capital of £100,000 into the partnership. The LLP carries on a trade. During the year ended 5 April 2013 he makes a further capital contribution of £60,000.

His share of the LLP’s trading loss is as follows:

Year ended 5 April 2011 £60,000
Year ended 5 April 2012 £60,000
Year ended 5 April 2013 £30,000

Y is entitled to sideways relief as follows:

2010/11 £60,000 (unrelieved capital contribution £40,000)
2011/12 £40,000 (a) (total relief limited to capital contribution of £100,000; unrelieved loss £20,000)
2012/13 £50,000 (b) (unrelieved capital contribution £10,000)
  1. Sideways loss relief is restricted to the unrelieved capital contribution brought forward of £40,000. The balance of the loss of £20,000 (£60,000 - £40,000) is carried forward as an unrelieved loss.
  2. Maximum sideways loss relief of £50,000 (that is the loss of the year £30,000 + unrelieved loss brought forward £20,000) is available to be claimed as sideways relief.