Details of the Schedule
The limit
2.Paragraph 1 inserts new section 24A after section 24 of Chapter 3 of Part 2 of Income Tax Act 2007 (ITA). New section 24(A)(1) provides for a limit on the amount of relief that may be deducted at step 2 of the income tax calculation for those reliefs listed in new section 24A(6). The reliefs are:
Trade Loss Relief against general income– available for losses made by an individual carrying on a trade, profession or vocation. This will exclude relief for losses attributable to overlap relief and Business Premises Renovation Allowances (BPRA);
Early Trade Losses Relief – available to an individual in the first four years of the trade, profession or vocation. This will exclude relief for losses attributable to overlap relief and BPRA;
Post-cessation Trade Relief – available for qualifying payments or qualifying events within seven years of the permanent cessation of the trade;
Property Loss Relief against general income – available for property business losses arising from capital allowances or agricultural expenses. This will exclude relief for losses attributable to BPRA;
Post-cessation Property Relief – available for qualifying payments or qualifying events within seven years of the permanent cessation of the UK property business;
Employment Loss Relief against general income– available in certain circumstances where losses or liabilities arise from employment;
Former Employees Deduction for Liabilities – available for payments made by former employees for which they are entitled to claim a deduction from their general income in the year in which the payment is made;
Share Loss Relief on non-EIS/SEIS shares – available for capital losses on the disposal (or deemed disposal) of certain qualifying shares;
Losses on Deeply Discounted Securities – available only for losses on gilt strips and on listed securities held since at least 26 March 2003; and
Qualifying Loan Interest – available for interest paid on certain loans. These include loans to buy an interest in certain types of company, or to invest in a partnership.
3.New sections 24A(3) to (5) set out the method of computing the limit.
4.New section 24A(7) lists deductions for amounts of relief that are specifically excluded from the limit.
5.New section 24A(8) explains how to calculate “adjusted total income” for the purposes of the limit.
Consequential Amendments
6.Paragraph 2 provides consequential amendments to step 2 of the income tax calculation in section 23 ITA and in specific relief provisions.
7.Paragraph 4 enables qualifying shares to which SEIS relief has been attributed to be identified for the purpose of the deduction in new section 24A (7)(d)(ii).
Commencement and transitional provision
8.Paragraph 3 provides for the limit to take effect for tax year 2013-14 and subsequent tax years.
9.Paragraph 4 provides that the limit will also apply where loss relief is claimed for a tax year before 2013-14 in relation to losses made in 2013-14 or a later year.
10.Paragraph 5 ensures that the limit will not apply to property loss relief arising from a loss made in 2012-13 where the loss is claimed for relief against general income in tax year 2013-14.
