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HMRC internal manual

Business Income Manual

Trade losses - types of relief: relief against general income

S64 Income Tax Act 2007 (ITA 2007)

Relief for trade losses against general income extends to:

  1. losses in trades (including a profession or vocation), provided they are carried on on a commercial basis and with a view to the realisation of profits (S66 ITA 2007);
  2. losses arising out of land - mines, quarries and other concerns - within S12 Income (Trading and Other Income) Act 2005 (see BIM60201);
  3. but not to relief for losses in an employment or office; these are not trade losses (see BIM85090).

This relief is not available for losses of 2013-14 and subsequent years calculated using cash basis, see BIM70000 onwards.

S64 ITA 2007 relief is against general income of the year of loss, or by reference to general income of the year preceding the year of loss. The relief does not extend to chargeable gains unless a supplementary claim under S261B Taxation Chargeable Gains Act 1992 is made (see BIM85025 onwards).

A person (individual, partner or trustee) who makes a loss in a tax year may claim relief for that year from Income Tax:

  • on income of that year (S64(2)(a) ITA 2007);
  • by reference to income of the previous year (S64(2)(b) ITA 2007) (see BIM85070);
  • or both (S64(2)(c) ITA 2007).

Temporary extension of S64 ITA 2007 carry back relief

A person who made a claim for S64 ITA 2007 relief for losses made in 2008-09 or 2009-10, or who had no income for Section 64 relief for both the year of loss and the previous year, could make a claim for relief under the extended loss relief provision in Sch6 Finance Act 2009 (see BIM85020).

Priority of relief where loss arises in only one year

If a loss is the subject of claims for both the current year and the previous year, the individual must specify which claim has priority (S64(3) ITA 2007). However, partial claims cannot be made for each year (see BIM85080); only the balance of the loss that cannot be used in the priority year remains available for use in the other year.


Mark has been carrying on a trade for a number of years and makes up his accounts annually to 30 September. He makes a loss of £20,000 in the year ended 30 September 2012; that is, for the tax year 2012-2013. He can relieve that loss against his general income in 2012-2013 or by reference to his general income in 2011-2012 or his general income in both 2011-2012 and 2012-2013. The claim must be made by 31 January 2015

If the loss is to be the subject of claims for both years, Mark must choose which claim has priority. But partial claims cannot be made (see BIM85080). The loss used in the priority year is an amount equal to income of that year. The remaining loss can be used in the other year.

If Mark had general income of £22,000 in 2012-2013 and £5,000 in 2011-2012, the alternative reliefs under S64 ITA 2007 would be:

  • £20,000 against 2012-2013,
  • £5,000 against 2011-2012 and £15,000 against 2012-2013.

It is not possible to relieve, say, £2,000 against 2011-2012 and £18,000 in 2012-2013. The claim for each year must be the smaller of the loss available for relief and the income available to be relieved.

Priority of relief where losses arise in more than one year

Income of one year may be covered by losses from two different years. If Mark also made a loss of £3,500 in 2013-2014, the 2012-2013 income of £22,000 can be covered by:

  • £20,000 from the 2012-2013 loss


  • £2,000 from the 2013-2014 loss.

Where this happens, the claim to the loss of the same year takes priority (S65(2) ITA 2007). In this example the 2012-2013 income could not be covered by losses of £3,500 from 2013-2014 and £18,500 from 2012-2013.

As regards activities which may have been set up with the primary object of creating artificial losses on which relief is claimed under S64 or S72 ITA 2007, see BIM85740.

As regards certain losses and certain forms of income which are not eligible for relief under S64 ITA 2007, for example uncommercial losses, see BIM85700 onwards.

BIM85070 provides information on claims involving more than one year.