Income and Corporation Taxes Act 1988

381 Further relief for individuals for losses in early years of trade. U.K.

(1) M1 Where an individual carrying on a trade sustains a loss in the trade in—

(a) the year of assessment in which it is first carried on by him; or

(b) any of the next three years of assessment;

he may, by notice given [F1 on or before the first anniversary of the 31st January next following] the year of assessment in which the loss is sustained, make a claim for relief under this section.

(2) M2 Subject to section 492 and this section, relief shall be given under subsection (1) above from income tax on [F2 so much of the claimant’s income as is equal to the amount of the loss or, where it is less than that amount, the whole of that income], being income for the three years of assessment last preceding that in which the loss is sustained, taking income for an earlier year before income for a later year.

(3) M3 Relief shall not be given for the same loss or the same portion of a loss both under subsection (1) above and under any other provision of the Income Tax Acts.

(4) M4 Relief shall not be given under subsection (1) above in respect of a loss sustained in any period unless F3 . . . the trade was carried on throughout that period on a commercial basis and in such a way that profits in the trade (or, where the carrying on of the trade forms part of a larger undertaking, in the undertaking as a whole) could reasonably be expected to be realised in that period or within a reasonable time thereafter.

(5) Relief shall not be given under subsection (1) above in respect of a loss sustained by an individual in a trade if—

(a) at the time when it is first carried on by him he is married to [F4 , or a civil partner of, another individual with whom he is living together and] who has previously carried on the trade; and

(b) the loss is sustained in a year of assessment later than the third year of assessment after that in which the trade was first carried on by the other individual.

(6) F5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) M5 This section applies, with the necessary modifications, in relation to a profession or vocation as it applies in relation to a trade.

Textual Amendments

F1 Words in s. 381(1) substituted (with effect in accordance with s. 135(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 21 para. 10

F2 Words in s. 381(2) substituted (with effect in accordance with s. 218 of the amending Act) by Finance Act 1994 (c. 9), s. 209(2) (with Sch. 20)

F3 Words in s. 381(4) repealed (with effect in accordance with s. 134(2) of the repealing Act) by Finance Act 1996 (c. 8), Sch. 20 para. 24, Sch. 41 Pt. 5(10), Note

F4 Words in s. 381(5)(a) substituted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 70

F5 S. 381(6) repealed (with effect in accordance with s. 215(4)(5) of the repealing Act) by Finance Act 1994 (c. 9), s. 216(3)(c), Sch. 26 Pt. 5(24), Note 4(a) (as s. 215(5) of that Act is modified (1.5.1995) by 1995 c. 4, s. 125(1)) (with Sch. 20)

Modifications etc. (not altering text)

C1 S. 381(1) modified for the year of assessment 1988-89 by S.I. 1991/851, reg. 9, Sch.2.

S. 381(1) modified (for the year of assessment 1989-90 only) (28.3.1992) by S.I. 1992/511, reg. 9, Sch.2.

C2 S. 381(1) applied with modification (23.3.1993) by S.I. 1993/415, reg. 9, Sch.2

C3 S. 381(1) modified (1991-92) by The Lloyd's Underwriters (Tax) (1991-92) Regulations 1994 (S.I. 1994/728), regs. 1, 9, Sch. 2

C4 S. 381(1) modified (1992-93, 1993-94 and 1994-5) by The Lloyd's Underwriters (Tax) (1992-93 to 1996-97) Regulations 1995 (S.I. 1995/352), regs. 1, 14, 15, Sch.

C5 See S.I. 1987 No.530 (in Part III Vol.5) regn. 15—non-resident entertainers and sportsmen.

C6 See 1990(C) s.142—restriction of set-off of first-year allowances.

Marginal Citations

M1 Source—1978 s.30(1)

M2 Source—1978 s.30(2)

M3 Source—1978 s.30(3)

M4 Source—1978 s.30(4)-(6)

M5 Source—1978 s.30(10)