Income Tax Act 2007

Chapter 7 U.K. Losses from miscellaneous transactions

Loss relief against miscellaneous income U.K.

152 Losses from miscellaneous transactions U.K.

[F1 (1) If in a tax year (“the loss-making year”) a person makes a loss in a relevant transaction, the person may make a claim for loss relief against relevant miscellaneous income.]

(2) A transaction is a relevant one if, assuming there were profits or other income arising from it—

(a) those profits or that other income would be [F2 income on which income tax is charged under, or by virtue of, a relevant section 1016 provision (“the relevant provision”)], and

(b) the person would be liable for income tax charged on those profits or that other income.

[F3 (2A) A relevant section 1016 provision” means a provision to which section 1016 applies, other than—

(a) regulation 17 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001) (treatment of participants in non-reporting funds: charge to tax on disposal of asset), or

(b) Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance etc).]

(3) The claim is for the loss to be deducted in calculating the person's net income for the loss-making year and subsequent tax years (see Step 2 of the calculation in section 23).

(4) But a deduction for that purpose is to be made only from the person's [F4 relevant] miscellaneous income.

(5) [F5 The person's “relevant miscellaneous income] is so much of the person's total income as is—

(a) income or gains arising from transactions, and

[F6 (b) income on which income tax is charged under, or by virtue of, the relevant provision.]

This is subject to subsection (6).

(6) If the loss was made by the person as a partner in a partnership, the transactions covered by subsection (5)(a) are limited to transactions entered into by the partnership.

(7) In calculating a person's net income for a tax year, deductions under this section from the person's [F7 relevant] miscellaneous income are to be made before deductions of any other reliefs from that [F7 relevant] miscellaneous income.

F8 (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) This section needs to be read with—

(a) section 153 (how relief works),

(b) section 154 (transactions in deposit rights),F9 ...

[F10 (ba) section 154A (anti-avoidance), and]

(c) section 155 (claims).

Textual Amendments

F1 S. 152(1) substituted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(2)(a)

F2 Words in s. 152(2)(a) substituted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(2)(b)

F3 S. 152(2A) inserted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(2)(c)

F4 Word in s. 152(4) inserted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(2)(d)

F5 Words in s. 152(5) substituted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(2)(e)

F6 S. 152(5)(b) substituted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(2)(f)

F7 Word in s. 152(7) inserted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(2)(g)

F8 S. 152(8) omitted (with effect and application in accordance with s. 22(8) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 22(2)(h)

F9 Word in s. 152(9)(b) omitted (with effect in accordance with s. 22(9) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 22(2)(i)

F10 S. 152(9)(ba) inserted (with effect in accordance with s. 22(9) of the amending Act) by Finance Act 2015 (c. 11), s. 22(2)(i)

153 How relief works U.K.

This section explains how the deductions are to be made. The amount of the loss to be deducted at any step is limited in accordance with section 25(4) and (5).

Step 1

Deduct the loss from the [F11 relevant] miscellaneous income for the loss-making year.

Step 2

Deduct from the [F11 relevant] miscellaneous income for the next tax year the amount of the loss not previously deducted.

Step 3

Continue to apply Step 2 in relation to [F11 relevant] miscellaneous income for subsequent tax years until all the loss is deducted.

Textual Amendments

F11 Word in s. 153 inserted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(3)

Modifications etc. (not altering text)

C1 S. 153 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 69(4)

Deposit rights U.K.

154 Transactions in deposit rights U.K.

(1) This section applies if—

(a) a person makes a loss from the disposal or exercise of a right to receive an amount,

(b) the disposal or exercise is a transaction in a deposit under Chapter 11 of Part 4 of ITTOIA 2005 (see subsection (2)), and

(c) the person's total income for a tax year includes interest payable on the amount.

(2) The disposal or exercise is a transaction in a deposit under Chapter 11 of Part 4 of ITTOIA 2005 if, assuming there were a profit or gain from it, the profit or gain would be charged to tax under that Chapter.

(3) For the purposes of the giving of loss relief against [F12 relevant] miscellaneous income for the loss mentioned in subsection (1)(a), the interest mentioned in subsection (1)(c) is treated as [F13 relevant miscellaneous income, for the tax year, in relation to the loss.]

Textual Amendments

F12 Word in s. 154(3) inserted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(4)(a)

F13 Words in s. 154(3) substituted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(4)(b)

Supplementary U.K.

[F14 154A Anti-avoidance U.K.

(1) Subsection (2) applies if—

(a) a person makes a loss in a relevant transaction, and

(b) that loss arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements.

(2) The person is not to be given loss relief under section 152 for the loss.

(3) Subsection (4) applies if—

(a) a person has income on which income tax is chargeable under, or by virtue of, a relevant section 1016 provision, and

(b) that income arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements.

(4) The person is not to be given loss relief against that income under section 152.

(5) In this section “relevant tax avoidance arrangements” means arrangements—

(a) to which the person is party, and

(b) the main purpose, or one of the main purposes, of which is to obtain a reduction in tax liability by means of loss relief under section 152.

(6) In subsection (5) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).]

Textual Amendments

F14 S. 154A inserted (with effect and application in accordance with s. 22(9)-(11) of the amending Act) by Finance Act 2015 (c. 11), s. 22(5)

155 Time limit for claiming relief U.K.

(1) So far as a claim for loss relief against [F15 relevant] miscellaneous income concerns the amount of the loss for a tax year, it must be made [F16 not more than 4 years after the end of] the tax year.

(2) But—

(a) the question whether, and

(b) if so, how much,

loss relief against [F15 relevant] miscellaneous income should be given for a tax year may be the subject of a separate claim made [F17 not more than 4 years after the end of] the tax year.

Textual Amendments

F15 Word in s. 155(1)(2) inserted (with effect and application in accordance with s. 22(8) of the amending Act) by Finance Act 2015 (c. 11), s. 22(6)

F16 Words in s. 155(1) substituted (1.4.2010) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 58; S.I. 2009/403, art. 2(2) (with art. 10)

F17 Words in s. 155(2) substituted (1.4.2010) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 58; S.I. 2009/403, art. 2(2) (with art. 10)