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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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restriction of relief: contents

Trade losses may be relieved by deducting the amount of the loss from other types of taxable income. There are restrictions to the use of losses in this way, known as sideways relief, to ensure that relief is only given for genuine commercial losses. Additional restrictions apply to partnerships, see BIM82600 onwards.

Sideways loss relief is one of a number of reliefs within the scope of the limit on Income Tax reliefs, which has effect for 2013-14 and subsequent years. There is a limit on the amount of Income Tax relief that an individual may claim for deduction from total income in a tax year. The limit applies to the aggregate of the relevant reliefs claimed for in the tax year. Losses of 2013-14 that are used against income of an earlier year are subject to the limit on reliefs. The limit on reliefs applies after the other restrictions on sideways loss relief in BIM85705 onwards but has no effect on the following:

  • relief for a tax year for which adjusted total income is less than £50,000
  • losses created by overlap relief or to the extent that the loss is augmented by overlap relief
  • losses used against profits of the loss making trade
  • losses treated as an allowable loss for capital gains tax purposes.

Helpsheet204 Limit on Income Tax Reliefs provides detailed information on the limit on reliefs.