(1)This Chapter restricts the amount of relief that may be given for any loss made by an individual in a trade carried on by the individual as—
(a)a limited partner in any tax year (see sections [F1103A, 103C to 105, 113A and 114]),
(b)a member of a limited liability partnership (an “LLP”) in any tax year (see sections [F2103C, 103D, 107 to 109, 113A and 114]), or
(c)a non-active partner [F3(see sections 103B to 103D and 110 to 114) ].
(2)This Chapter also restricts the amount of relief that may be given for any loss made by an individual in a trade carried on by the individual as a partner in a firm if the trade consists of or includes the exploitation of films (see [F4section 115 ]).
[F5(2A)This Chapter also provides for no relief to be given for a loss made by an individual in a trade carried on by the individual as a partner in a firm in certain cases where some or all of the loss is allocated to the individual rather than a person who is not an individual (see section 116A).]
(3)This Chapter needs to be read with sections 791 to 795 (income tax charge recovering excess relief for losses made by individuals carrying on a trade in partnership).
(4)See also—
(a)sections 796 to 803 (income tax charge in relation to individuals claiming relief for film-related trading losses), and
(b)sections 804 to 809 (income tax charge in relation to individuals carrying on a trade in partnership claiming relief for licence-related trading losses).
Textual Amendments
F1Words in s. 102(1)(a) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 7(2)(a), 21
F2Words in s. 102(1)(b) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 7(2)(b), 21
F3Words in s. 102(1)(c) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 7(2)(c), 21
F4Words in s. 102(2) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 7(3), 21
F5S. 102(2A) inserted (with effect in accordance with Sch. 17 para. 14 of the amending Act) by Finance Act 2014 (c. 26), Sch. 17 para. 8(2)
(1)For the purposes of this Chapter sideways relief is—
(a)trade loss relief against general income (see sections 64 to 70), or
(b)early trade losses relief (see sections 72 to 74).
(2)For the purposes of this Chapter—
(a)capital gains relief is, in relation to a loss, the treatment of the loss as an allowable loss by virtue of section 261B of TCGA 1992 (use of trading loss as a CGT loss), and
(b)capital gains relief is given for a loss when it is so treated.
(3)References in this Chapter to a firm are to be read in the same way as references to a firm in Part 9 of ITTOIA 2005 (which contains special provision about partnerships).
(1) In this Chapter “ limited partner ” means an individual who carries on a trade—
(a)as a limited partner in a limited partnership registered under the Limited Partnerships Act 1907,
(b)as a partner in a firm who in substance acts as a limited partner in relation to the trade (see subsection (2)), or
(c)while the condition mentioned in subsection (3) is met in relation to the individual.
(2)An individual in substance acts as a limited partner in relation to a trade if the individual—
(a)is not entitled to take part in the management of the trade, and
(b)is entitled to have any liabilities (or those beyond a certain limit) for debts or obligations incurred for the purposes of the trade met or reimbursed by some other person.
(3)The condition referred to in subsection (1)(c) is that—
(a)the individual carries on the trade jointly with other persons,
(b)under the law of a territory outside the United Kingdom, the individual is not entitled to take part in the management of the trade, and
(c)under that law, the individual is not liable beyond a certain limit for debts or obligations incurred for the purposes of the trade.
(4)In the case of an individual who is a limited partner as a result of subsection (1)(c), references in this Chapter to the individual's firm are to be read as references to the relationship between the individual and the other persons mentioned in subsection (3)(a).
Textual Amendments
F6Ss. 103A, 103B inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 8, 21
(1)For the purposes of this Chapter an individual carries on a trade as a non-active partner during a tax year if the individual—
(a)carries on the trade as a partner in a firm at a time during the year,
(b)does not carry on the trade as a limited partner at any time during the year, and
(c)does not devote a significant amount of time to the trade in the relevant period for the year.
(2)For the purposes of this Chapter an individual devotes a significant amount of time to a trade in the relevant period for a tax year if, in that period, the individual spends an average of at least 10 hours a week personally engaged in activities [F7of the trade and those activities are carried on—
(a)on a commercial basis, and
(b)with a view to the realisation of profits as a result of the activities.]
[F8(3)For this purpose “the relevant period” means—
(a)where the individual first started to carry on the trade less than six months before the end of the tax year, the period of six months beginning with the date on which the individual first started to carry on the trade;
(b)where the individual permanently ceased to carry on the trade less than six months after the start of the tax year, the period of six months ending with the date on which the individual permanently ceased to carry on the trade;
(c)in any other case, the tax year.]
F9(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)If—
(a)any relief is given on the assumption that the individual devoted or will devote a significant amount of time to the trade in the relevant period for a tax year, but
(b)the individual in fact failed or fails to do so,
the relief is withdrawn by the making of an assessment to income tax under this section.]
Textual Amendments
F6Ss. 103A, 103B inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 8, 21
F7Words in s. 103B(2) substituted (21.7.2008 with effect in accordance with s. 61(2) of the amending Act) by Finance Act 2008 (c. 9), s. 61(1)
F8S. 103B(3) substituted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by Finance Act 2022 (c. 3), Sch. 1 paras. 49(2), 61(1)
F9S. 103B(4) omitted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2022 (c. 3), Sch. 1 paras. 49(3), 61(1)
Textual Amendments
F10S. 103C and cross-heading inserted (with effect in accordance with Sch. 4 para. 1(2)-(13) of the amending Act) by Finance Act 2007 (c. 11), Sch. 4 para. 1(1)
(1)This section applies if an individual carries on one or more trades—
(a)as a non-active partner in a firm during a tax year, or
(b)as a limited partner in a firm at a time in that tax year,
and the individual makes a loss in any of those trades (an “affected loss”) in that tax year.
(2)There is a restriction on the amount of sideways relief and capital gains relief which (after applying the restrictions under the other provisions of this Chapter) may be given to the individual for any affected loss (but see subsections (6) and (7)).
(3)The restriction is that the total amount of the sideways relief and capital gains relief given to the individual for all the affected losses must not exceed the cap for that tax year.
(4)The cap for any tax year is £25,000.
(5)The Treasury may by order amend the sum for the time being specified in subsection (4).
(6)The restriction under this section does not apply to so much of any affected loss as derives from qualifying film expenditure (see section 103D).
(7)The restriction under this section does not affect the giving of sideways relief for a loss made in a trade against the profits of that trade.
(8) In this section “ trade ” does not include a trade which consists of the underwriting business of a member of Lloyd's (within the meaning of section 184 of FA 1993). ]
(1)For the purposes of this Chapter expenditure is qualifying film expenditure if—
(a) it is deducted under a relevant film provision for the purposes of the calculation required by section 849 of ITTOIA 2005 (calculation of firm's profits or losses), or
(b)it is incidental expenditure which (although not deducted under a relevant film provision) is incurred in connection with the production of a film, or the acquisition of the original master version of a film, in relation to which expenditure is so deducted.
(2)Expenditure is incidental if it is on management, administration or obtaining finance.
(3)The extent to which expenditure is within subsection (1)(b) is determined on a just and reasonable basis.
(4)For the purposes of this Chapter the amount of any loss that derives from qualifying film expenditure is determined on a just and reasonable basis.
(5)In this section—
“ the acquisition of the original master version of a film ” has the same meaning as in Chapter 9 of Part 2 of ITTOIA 2005 (see sections 130 and 132 of that Act),
“ film ” is to be read in accordance with paragraph 1 of Schedule 1 to the Films Act 1985, and
“ a relevant film provision ” means any one of sections 137 to 140 of ITTOIA 2005 (relief for certified master versions of films). ]
Textual Amendments
F11S. 103D inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 9, 21
(1)This section applies if—
(a)at a time in a tax year (“the relevant tax year”) an individual carries on a trade (“the relevant trade”) as a limited partner in a firm, and
(b)the individual makes a loss in the relevant trade in the relevant tax year.
(2)There is a restriction on the amount of relief within subsection (3) which may be given to the individual for the loss.
(3)The relief within this subsection is—
(a)sideways relief against the individual's income apart from profits of the relevant trade, and
(b)capital gains relief.
(4)The restriction is that—
(a)the sum of the amount of the relief given and the total amount of all other relevant relief given, less
(b)the total amount of recovered relief,
must not exceed the individual's contribution to the firm as at the end of F12... the relevant tax year (see section 105).
(5)“Relevant relief” means sideways relief or capital gains relief given to the individual for—
(a)a loss made in the relevant trade in a tax year at a time during which the individual carries on that trade as a limited partner, or
(b)a loss made in the relevant trade in an early tax year during which the individual carries on that trade as a non-active partner F13....
(6)“The total amount of recovered relief” means the total amount of income treated as received by the individual under section 792 (recovery of excess relief) as a result of the application of that section in relation to claims for relief for losses made by the individual in the relevant trade.
(7)If the firm is carrying on, or has carried on, other trades apart from the relevant trade, for the purpose of determining the total amount of all other relevant relief and the total amount of recovered relief—
(a)apply subsection (5) in relation to each other trade as well as the relevant trade and then add the results together, and
(b)apply subsection (6) as if the reference to the relevant trade were a reference to the relevant trade or any of the other trades.
Textual Amendments
F12Words in s. 104(4) omitted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2022 (c. 3), Sch. 1 paras. 50, 61(1)
F13Words in s. 104(5) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 10(a), 21, Sch. 27 Pt. 2(1)
(1)For the purposes of section 104 the individual's contribution to the firm is the sum of amounts A and B.
(2)Amount A is the amount which the individual has contributed to the firm as capital less so much of that amount (if any) as is within subsection (4).
(3)In particular, the individual's share of any profits of the firm is to be included in the amount which the individual has contributed to the firm as capital so far as that share has been added to the firm's capital.
(4)An amount of capital is within this subsection if it is an amount which—
(a)the individual has previously drawn out or received back,
(b)the individual is or may be entitled to draw out or receive back at any time when the individual is carrying on a trade as a limited partner in the firm, or
(c)the individual is or may be entitled to require another person to reimburse to the individual.
(5)In subsection (4) any reference to drawing out or receiving back an amount is to doing so directly or indirectly but does not include drawing out or receiving back an amount which, because of its being drawn out or received back, is chargeable to income tax as profits of a trade.
(6)Amount B is the amount of the individual's total share of profits within subsection (7) except so far as—
(a)that share has been added to the firm's capital, or
(b)the individual has received that share in money or money's worth.
(7)Profits are within this subsection if they are from the relevant trade.
(8)In determining the amount of the individual's total share of profits within subsection (7) ignore the individual's share of any losses from the relevant trade which would (apart from this subsection) reduce that amount.
(9)In subsections (3), (7) and (8) any reference to profits or losses are to profits or losses calculated in accordance with generally accepted accounting practice (before any adjustment required or authorised by law in calculating profits or losses for income tax purposes).
(10)If the firm is carrying on, or has carried on, other trades apart from the relevant trade, subsections (7) and (8) have effect as if references to the relevant trade were references to the relevant trade or any of the other trades.
(11)This section needs to be read with [F14section 113A and any regulations made under section 114 (exclusion of amounts] in calculating the individual's contribution to the firm for the purposes of section 104).
Textual Amendments
F14Words in s. 105(11) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 11(a), 21
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F15S. 106 repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 12, 21, Sch. 27 Pt. 2(1)
(1)This section applies if—
(a)an individual carries on a trade (“the relevant trade”) as a member of an LLP at a time in a tax year, and
(b)the individual makes a loss in the relevant trade in the tax year (“the relevant tax year”).
(2)But if the relevant tax year is an early tax year during which the individual carries on the relevant trade as a non-active partner F16...—
(a)this section does not apply, and
(b)section 110 applies instead.
(3)There is a restriction on the amount of relief within subsection (4) which may be given to the individual for the loss.
(4)The relief within this subsection is—
(a)sideways relief against the individual's income apart from profits of the relevant trade, and
(b)capital gains relief.
(5)The restriction is that—
(a)the sum of the amount of the relief given and the total amount of all other relevant relief given, less
(b)the total amount of recovered relief,
must not exceed the individual's contribution to the LLP as at the end of F17... the relevant tax year (see section 108).
(6)“Relevant relief” means sideways relief or capital gains relief given to the individual for—
(a)a loss made in the relevant trade in a tax year at a time during which the individual carries on that trade as a member of an LLP, or
(b)a loss made in the relevant trade in an early tax year during which the individual carries on that trade as a non-active partner.
(7)“The total amount of recovered relief” means the total amount of income treated as received by the individual under section 792 (recovery of excess relief) as a result of the application of that section in relation to claims for relief for losses made by the individual in the relevant trade.
(8)If the LLP is carrying on, or has carried on, other trades apart from the relevant trade, for the purpose of determining the total amount of all other relevant relief and the total amount of recovered relief—
(a)apply subsection (6) in relation to each other trade as well as the relevant trade and then add the results together, and
(b)apply subsection (7) as if the reference to the relevant trade were a reference to the relevant trade or any of the other trades.
Textual Amendments
F16Words in s. 107(2) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 10(b), 21, Sch. 27 Pt. 2(1)
F17Words in s. 107(5) omitted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2022 (c. 3), Sch. 1 paras. 51, 61(1)
(1)For the purposes of section 107 the individual's contribution to the LLP at any time (“the relevant time”) is the sum of amounts A and B.
(2)Amount A is the amount which the individual has contributed to the LLP as capital less so much of that amount (if any) as is within subsection (5).
(3)In particular, the individual's share of any profits of the LLP is to be included in the amount which the individual has contributed to the LLP as capital so far as that share has been added to the LLP's capital.
(4)In subsection (3) the reference to profits is to profits calculated in accordance with generally accepted accounting practice (before any adjustment required or authorised by law in calculating profits for income tax purposes).
(5)An amount of capital is within this subsection if it is an amount which—
(a)the individual has previously drawn out or received back,
(b)the individual draws out or receives back during the period of 5 years beginning with the relevant time,
(c)the individual is or may be entitled to draw out or receive back at any time when the individual is a member of the LLP, or
(d)the individual is or may be entitled to require another person to reimburse to the individual.
(6)In subsection (5) any reference to drawing out or receiving back an amount is to doing so directly or indirectly but does not include drawing out or receiving back an amount which, because of its being drawn out or received back, is chargeable to income tax as profits of a trade.
(7)Amount B is the amount of the individual's liability on a winding up of the LLP so far as that amount is not included in amount A.
(8)For the purposes of subsection (7) the amount of the individual's liability on a winding up of the LLP is the amount which—
(a)the individual is liable to contribute to the assets of the LLP in the event of its being wound up, and
(b)the individual remains liable to contribute for the period of at least 5 years beginning with the relevant time (or until the LLP is wound up, if that happens before the end of that period).
(9)This section needs to be read with [F18section 113A and any regulations made under section 114 (exclusion of amounts] in calculating the individual's contribution to the LLP for the purposes of section 107).
Textual Amendments
F18Words in s. 108(9) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 11(b), 21
(1)This section applies for the purpose of determining an individual's entitlement to sideways relief and capital gains relief if—
(a)the individual carries on a trade as a member of an LLP at a time during a tax year (“the current tax year”), and
(b)as a result of section 107, sideways relief or capital gains relief has not been given to the individual for amounts of loss made in the trade in previous tax years as a member of the LLP.
(2)So far as they are not excluded by subsection (3), the amounts of loss mentioned in subsection (1)(b) are treated as having been made in the current tax year.
(3)An amount of loss is excluded so far as—
(a)as a result of this section, sideways relief or capital gains relief has been given to the individual for the amount for years prior to the current tax year or would have been so given had a claim been made, or
(b)other than as a result of this section, relief under the Income Tax Acts has been given to the individual for the amount for years prior to the current tax year or for the current tax year.
(1)This section applies if—
(a)an individual carries on a trade (“the relevant trade”) as a non-active partner in a firm during an early tax year F19..., and
(b)the individual makes a loss in the relevant trade in that tax year (“the relevant tax year”).
(2)There is a restriction on the amount of relief within subsection (3) which may be given to the individual for the loss.
(3)The relief within this subsection is—
(a)sideways relief against the individual's income apart from profits of the relevant trade, and
(b)capital gains relief.
(4)The restriction is that—
(a)the sum of the amount of the relief given and the total amount of all other relevant relief given, less
(b)the total amount of recovered relief,
must not exceed the individual's contribution to the firm as at the end of F20... the relevant tax year (see section 111).
(5)“Relevant relief” means sideways relief or capital gains relief given to the individual for—
(a)a loss made in the relevant trade in a tax year at a time during which the individual carries on that trade as a limited partner or as a member of an LLP, or
(b)a loss made in the relevant trade in an early tax year during which the individual carries on that trade as a non-active partner.
(6)“The total amount of recovered relief” means the total amount of income treated as received by the individual under section 792 (recovery of excess relief) as a result of the application of that section in relation to claims for relief for losses made by the individual in the relevant trade.
(7)If the firm is carrying on, or has carried on, other trades apart from the relevant trade, for the purpose of determining the total amount of all other relevant relief and the total amount of recovered relief—
(a)apply subsection (5) in relation to each other trade as well as the relevant trade and then add the results together, and
(b)apply subsection (6) as if the reference to the relevant trade were a reference to the relevant trade or any of the other trades.
(8)In this section “trade” does not include a trade which consists of the underwriting business of a member of Lloyd's (within the meaning of section 184 of FA 1993).
Textual Amendments
F19Words in s. 110(1)(a) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 10(c), 21, Sch. 27 Pt. 2(1)
F20Words in s. 110(4) omitted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2022 (c. 3), Sch. 1 paras. 52, 61(1)
(1)For the purposes of section 110 the individual's contribution to the firm at any time (“the relevant time”) is the sum of amount A and amount B and, if there is a winding up of the firm, amount C.
(2)Amount A is the amount which the individual has contributed to the firm as capital less so much of that amount (if any) as is within subsection (4).
(3)In particular, the individual's share of any profits of the firm is to be included in the amount which the individual has contributed to the firm as capital so far as that share has been added to the firm's capital.
(4)An amount of capital is within this subsection if it is an amount which—
(a)the individual has previously drawn out or received back,
(b)the individual draws out or receives back during the period of 5 years beginning with the relevant time,
(c)the individual is or may be entitled to draw out or receive back at any time when the individual is carrying on a trade as a partner in the firm, or
(d)the individual is or may be entitled to require another person to reimburse to the individual.
(5)In subsection (4) any reference to drawing out or receiving back an amount is to doing so directly or indirectly but does not include drawing out or receiving back an amount which, because of its being drawn out or received back, is chargeable to income tax as profits of a trade.
(6)Amount B is the amount of the individual's total share of profits within subsection (7) except so far as—
(a)that share has been added to the firm's capital, or
(b)the individual has received that share in money or money's worth.
(7)Profits are within this subsection if they are from the relevant trade.
(8)In determining the amount of the individual's total share of profits within subsection (7) ignore the individual's share of any losses from the relevant trade which would (apart from this subsection) reduce that amount.
(9)In subsections (3), (7) and (8) any reference to profits or losses are to profits or losses calculated in accordance with generally accepted accounting practice (before any adjustment required or authorised by law in calculating profits or losses for income tax purposes).
(10)If the firm is carrying on, or has carried on, other trades apart from the relevant trade, subsections (7) and (8) have effect as if references to the relevant trade were references to the relevant trade or any of the other trades.
Subsection (8) of section 110 applies for the purposes of this subsection as it applies for the purposes of that section.
(11)Amount C is the amount which the individual has contributed to the assets of the firm on its winding up so far as it is not included in amount A or B.
(12)This section needs to be read with [F21section 113A and any regulations made under section 114 (exclusion of amounts] in calculating the individual's contribution to the firm for the purposes of section 110).
Textual Amendments
F21Words in s. 111(12) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 11(c), 21
F23(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F23(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F23(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F23(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F23(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6)In this Chapter “early tax year” means, in relation to an individual carrying on a trade—
(a)the tax year in which the individual first started to carry on the trade, or
(b)one of the next 3 tax years.
Textual Amendments
F22S. 112 heading substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 13(b), 21
F23S. 112(1)-(5) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 13(a), 21, Sch. 27 Pt. 2(1)
(1)This section applies for the purpose of determining an individual's entitlement to sideways relief and capital gains relief in relation to a trade if—
(a)at a time during a tax year (“the current tax year”) the individual carries on the trade as a partner in a firm or makes a contribution to the assets of a firm within subsection (2) on the firm's winding up, and
(b)as a result of section 110, sideways relief or capital gains relief has not been given to the individual for amounts of loss made in the trade in previous tax years.
(2)A firm is within this subsection if the individual has carried on the trade as a partner in the firm.
(3)So far as they are not excluded by subsection (4), the amounts of loss mentioned in subsection (1)(b) are treated as having been made in the current tax year.
(4)An amount of loss is excluded so far as—
(a)as a result of this section, sideways relief or capital gains relief has been given to the individual for the amount for years prior to the current tax year or would have been so given had a claim been made, or
(b)other than as a result of this section, relief under the Income Tax Acts has been given to the individual for the amount for years prior to the current tax year or for the current tax year.
(5)For the purpose of applying sections 107 and 110 in relation to the amounts of loss treated by this section as having been made in the current tax year—
(a)the individual is treated as having carried on the trade during the current tax year as a non-active partner in the firm, and
(b)the current tax year is treated as if it were an early tax year in relation to the individual's carrying on of the trade.
(6)Subsection (7) applies if the individual—
(a)made a contribution in the current tax year to the assets of the firm on its winding up, but
(b)did not carry on the trade as a partner in the firm in the current tax year.
(7)If this subsection applies—
(a)the restrictions under sections 66 and 74(1) do not apply in relation to the amounts of loss treated by this section as having been made in the current tax year, F24...
F24(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)In subsection (1)(b) the reference to amounts of loss does not include amounts of loss which have been treated by section 109 as having been made in any previous tax year.
Textual Amendments
F24S. 113(7)(b) and word omitted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2022 (c. 3), Sch. 1 paras. 53, 61(1)
Textual Amendments
F25 S. 113A and cross-heading inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 4 para. 2
(1)An amount which an individual contributes to a firm as capital is to be excluded in calculating the individual's contribution to the firm for the purposes of section 104 or 110 if the contribution was made for a prohibited purpose (but see subsection (4)).
(2)If—
(a)an individual carries on a trade as a member of an LLP at a time in a tax year,
(b)the individual does not devote a significant amount of time to the trade in the relevant period for that year, and
(c)the individual contributes an amount to the LLP as capital at any time in that year,
that amount is to be excluded in calculating the individual's contribution to the LLP for the purposes of section 107 if the contribution was made for a prohibited purpose (but see subsection (4)).
(3)For the purposes of this section a contribution is made for a prohibited purpose if the main purpose, or one of the main purposes, of making the contribution is the obtaining of a reduction in tax liability by means of sideways relief or capital gains relief.
(4)This section has no effect in relation to the application of any restriction under section 104, 107 or 110 to any loss that derives wholly from qualifying film expenditure.]
Textual Amendments
F26S. 114 cross-heading omitted and s. 114 heading substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 14, 21
(1)The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that any amount of a specified description is to be excluded in calculating—
(a)the individual's contribution to the firm for the purposes of section 104 or 110, or
(b)the individual's contribution to the LLP for the purposes of section 107.
(2)“Specified” means specified in the regulations.
(3)The regulations may—
(a)make provision having retrospective effect,
(b)contain incidental, supplemental, consequential and transitional provision and savings, and
(c)make different provision for different cases or purposes.
(4)The provision which may be made as a result of subsection (3)(b) includes provision amending or repealing any provision of an Act passed before FA 2005.
(5)No regulations may be made under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.
(1)This section applies if—
(a)an individual carries on a trade as a partner in a firm at a time during a tax year,
(b)the trade consists of or includes the exploitation of films,
(c)the individual makes a loss in the trade in the tax year (“the affected tax year”),
(d)the individual does not devote a significant amount of time to the trade in the relevant period for the affected tax year F27...,
(e)the affected tax year is the one in which the individual first started to carry on the trade or is one of the next 3 tax years, and
(f)a relevant agreement existed at a time during the affected tax year which guaranteed the individual an amount of income (see subsections (5) to (9)).
(2)Sideways relief for the loss is not available to the individual, except against any of the individual's income which consists of profits of the trade.
(3)Capital gains relief for the loss is not available to the individual.
[F28(4)The restrictions under this section do not apply to so much of the loss (if any) as derives from qualifying film expenditure.]
(5)An agreement is relevant if—
(a)it is an agreement made with a view to the individual's carrying on the trade,
(b)it is an agreement made in the course of the individual's carrying it on, or
(c)it is related to an agreement falling within paragraph (a) or (b).
(6)An agreement is relevant whether or not the individual is or may be required under the agreement to contribute an amount to the trade.
(7)Agreements are related to one another if they are entered into under the same arrangement (regardless of when either agreement is entered into).
(8)A relevant agreement guarantees the individual an amount of income if it (or any part of it) is designed to secure the receipt by the individual of that amount (or at least that amount) of income.
(9)It does not matter when the amount of income is (or is to be) received.
(10)In this section “film” is to be read in accordance with paragraph 1 of Schedule 1 to the Films Act 1985 (c. 21).
Textual Amendments
F27Words in s. 115(1)(d) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 10(d), 21, Sch. 27 Pt. 2(1)
F28S. 115(4) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 15, 21
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F29S. 116 repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 4 paras. 16, 21, Sch. 27 Pt. 2(1)
Textual Amendments
F30S. 116A and cross-heading inserted (with effect in accordance with Sch. 17 para. 14 of the amending Act) by Finance Act 2014 (c. 26), Sch. 17 para. 8(2)
(1)Subsection (2) applies if—
(a)in a tax year, an individual (“A”) makes a loss in a trade as a partner in a firm, and
(b)A's loss arises, wholly or partly—
(i)directly or indirectly in consequence of, or
(ii)otherwise in connection with,
relevant tax avoidance arrangements.
(2)No relevant loss relief may be given to A for A's loss.
(3)In subsection (1)(b) “relevant tax avoidance arrangements” means arrangements—
(a)to which A is party, and
(b)the main purpose, or one of the main purposes, of which is to secure that losses of a trade are allocated, or otherwise arise, in whole or in part to A, rather than a person who is not an individual, with a view to A obtaining relevant loss relief.
(4)In subsection (3)(b) references to A include references to A and other individuals.
(5)For the purposes of subsection (3)(b) it does not matter if the person who is not an individual is not a partner in the firm or is unknown or does not exist.
(6)In this section—
“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and
“relevant loss relief” means—
sideways relief,
relief under section 83 (carry-forward trade loss relief),
relief under section 89 (terminal trade loss relief), or
capital gains relief.
(7)This section applies to professions as it applies to trades.]