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HMRC internal manual

Business Income Manual

Post-cessation receipts and expenses: post-cessation trade relief: interaction with relief for liabilities of a former employment

Where relief is available for liabilities of a former employment in the same tax year as relief is available under post-cessation trade relief, the former takes priority

Relief may be available for certain liabilities incurred by employees after cessation of their employment. See S555-S564 Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) and EIM30530 onwards.

Where, in the same year, a person has claims to relief both for post-cessation trade relief (see BIM90100) and for relief in respect of liabilities of a former employment under S555 ITEPA 2003, the relief under Section 555 takes priority.

This is because if the claimant has insufficient other income in the year to cover the allowable expenditure of that year, the excess Section 555 relief is lost. However, expenditure which qualifies under S96 Income Tax Act 2007 may be relievable by setting against chargeable gains (see BIM90130) or by carrying the expenditure forward to set against post-cessation receipts from the same trade (see BIM90135).