Income and Corporation Taxes Act 1988

117 Restriction on relief: individuals. U.K.

(1) M1 An amount which may be given F1 . . . to an individual under section F2 . . . 380 or 381 below F3 . . . —

(a) in respect of a loss sustained by him in a trade F4 . . . in a relevant year of assessment;F5 . . .

(b) F5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

may be given F1 . . . otherwise than against income consisting of [F6 profits] arising from the trade only to the extent that the amount given F1 . . . or (as the case may be) the aggregate amount does not exceed the relevant sum.

(2) M2 In this section—

• “limited partner” means—

  (i)

  a person who is carrying on a trade as a limited partner in a limited partnership registered under the M3 Limited Partnerships Act 1907;

  (ii)

  a person who is carrying on a trade as a general partner in a partnership, who is not entitled to take part in the management of the trade and who is entitled to have his liabilities, or his liabilities beyond a certain limit, for debts or obligations incurred for the purposes of the trade discharged or reimbursed by some other person; or

  (iii)

  a person who carries on a trade jointly with others and who, under the law of any territory outside the United Kingdom, is not entitled to take part in the management of the trade and is not liable beyond a certain limit for debts or obligations incurred for the purposes of the trade;

• “relevant year of assessment” means a year of assessment at any time during which the individual carried on the trade as a limited partner;

• “the aggregate amount” means the aggregate of any amounts given F7 . . . to him at any time under section F8 . . . 380 or 381 below F9 . . . —

  (a)

  in respect of a loss sustained by him in the trade F10 . . . in a relevant year of assessment [F11 or a qualifying year of assessment within the meaning of section 118ZE]; F12 . . .

  (b)

  F12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  [F13 less the amount of any reclaimed relief at that time;]

• [F14 “the amount of any reclaimed relief” at any time means the total of any amounts at that time which the individual has been treated as receiving under section 74 of the Finance Act 2005 (recovery of excess relief given under section 380 or 381) as a result of the application of that section of that Act to him in respect of losses sustained by him in the trade;]

• “the relevant sum” means the amount of his contribution to the trade as at the appropriate time; and

• “the appropriate time” is the end of the relevant year of assessment in which the loss is sustained F15 . . . or for which the allowance falls to be made (except that where he ceased to carry on the trade during that year of assessment it is the time when he so ceased).

(3) M4 A person’s contribution to a trade at any time is the aggregate of—

(a) the amount which he has contributed to it as capital and has not, directly or indirectly, drawn out or received back (other than anything which he is or may be entitled so to draw out or receive back at any time when he carries on the trade as a limited partner or which he is or may be entitled to require another person to reimburse to him), and

(b) the amount of any [F6 profits] of the trade to which he is entitled but which he has not received in money or money’s worth.

(4) M5 To the extent that an allowance is taken into account in computing [F6 profits] or losses in the year of the loss by virtue of section 383(1) it shall, for the purposes of this section, be treated as falling to be made in the year of the loss (and not the year of assessment for which the year of loss is the basis year).

[F16 (5) This section is subject to provision made by regulations under section 118ZN (partners: meaning of “contribution to the trade”).]

Textual Amendments

F1 Words in s. 117(1) repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 22(1)(a), Sch. 4

F2 Words in s. 117(1) repealed (retrospective to 2.12.2004 with effect in accordance with s. 72(7)-(11) of the repealing Act) by Finance Act 2005 (c. 7), s. 72(1)(a)(i)(12), Sch. 11 Pt. 2(4), Note

F3 Words in s. 117(1) repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 22(1)(b), Sch. 4

F4 Words in s. 117(1)(a) repealed (retrospective to 2.12.2004 with effect in accordance with s. 72(7)-(11) of the repealing Act) by Finance Act 2005 (c. 7), s. 72(1)(a)(ii)(12), Sch. 11 Pt. 2(4), Note

F5 S. 117(1)(b) and preceding word repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 22(1)(c), Sch. 4

F6 Words in s. 117(1)(3)(b)(4) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a)(b) Sch. 7 para. 1

F7 Words in s. 117(2) repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 22(2)(a), Sch. 4 (with Sch. 2 para. 22(3))

F8 Words in s. 117(2) repealed (retrospective to 2.12.2004 with effect in accordance with s. 72(7)-(11) of the repealing Act) by Finance Act 2005 (c. 7), s. 72(1)(b)(i)(12), Sch. 11 Pt. 2(4), Note

F9 Words in s. 117(2) repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 22(2)(b), Sch. 4 (with Sch. 2 para. 22(3))

F10 Words in s. 117(2) repealed (retrospective to 2.12.2004 with effect in accordance with s. 72(7)-(11) of the repealing Act) by Finance Act 2005 (c. 7), s. 72(1)(b)(ii)(12), Sch. 11 Pt. 2(4), Note

F11 Words in s. 117(2) inserted (22.7.2004) by Finance Act 2004 (c. 12), s. 124(2)

F12 S. 117(2)(b) and preceding word repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 22(2)(c), Sch 4 (with Sch. 2 para. 22(3))

F13 Words in s. 117(2) inserted (retrospective to 2.12.2004) by Finance Act 2005 (c. 7), s. 78(1)(a)(4)

F14 S. 117(2): definition of "the amount of any reclaimed relief" inserted (retrospective to 2.12.2004) by Finance Act 2005 (c. 7), s. 78(1)(b)(4)

F15 Words in s. 117(2) repealed (retrospective to 2.12.2004 with effect in accordance with s. 72(7)-(11) of the repealing Act) by Finance Act 2005 (c. 7), s. 72(1)(c)(12), Sch. 11 Pt. 2(4), Note

F16 S. 117(5) added (retrospective to 2.12.2004) by Finance Act 2005 (c. 7), s. 73(2)(5)

Marginal Citations

M1 Source—1985 Sch.12 2(1)-(3).

M2 1985 Sch.12 1, 2(4)

M3 1907 c. 24.

M4 Source—1985 Sch.12 4

M5 Source—1985 Sch.12 2(5)