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HMRC internal manual

Business Income Manual

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Post-cessation receipts and expenses: overview of reliefs for post-cessation expenses

S254-S255 Income Tax (Trading and Other Income) Act 2005; S96, S101 Income Tax Act 2007; S261D Taxation of Chargeable Gains Act 1992; S196-S197 Corporation Tax Act 2009

There are four different ways in which post-cessation expenses can be relieved and a specific order of priority is set out in the legislation

There are a number of different ways in which relief can be given for post-cessation expenses incurred by those subject to Income Tax:

  • deducted from post-cessation receipts (see BIM90095)
  • as losses which can be set against total income (known as post-cessation trade relief, see BIM90100)
  • as losses which can be deducted from chargeable gains (see BIM90130)
  • carried forward to be deducted against future post-cessation receipts from the same trade (see BIM90135)

People subject to Income Tax are individuals, trustees, personal representatives and non-resident companies.

Companies subject to Corporation Tax are only able to obtain relief under (1) and (4) above.

For the meaning of post-cessation expenses, see BIM90080.

Order of priority of reliefs

Post-cessation expenses must always be deducted from post-cessation receipts arising from the same trade in the relevant period before considering any other methods of relief (see BIM90095).

Then, if the post-cessation expenses are incurred by someone who is subject to Income Tax, he can claim relief against, firstly, the total income in the tax year and, secondly, the capital gains arising in the tax year (to the extent that the expenses exceed total income). This is only possible where the expenditure falls into certain categories (see BIM90110 and BIM90115).

If relief is not possible under any of the above mechanisms, the taxpayer can also carry the post-cessation expenses forward to be deducted against post-cessation receipts of the same trade (see BIM90135).

No double counting

There is no double counting of the post-cessation expenses. Once relief is given under one provision it cannot be given under any other provisions in that period or any other.