SCHEDULES
SCHEDULE 2Temporary extension of periods to which trade losses may be carried back
PART 1Income tax
Relief for trade losses made in tax year 2021-22
2
1
A person who has made a loss in a trade in the tax year 2021-22 may make a claim for relief under this paragraph if—
a
some or all of the loss (“the section 64 amount”) is an amount in respect of which the person is entitled to make a claim under section 64 of ITA 2007 (trade loss relief against general income) or would be so entitled were there sufficient income from which to deduct it, and
b
condition A or B is met.
2
Condition A is that the person makes a claim under section 64 of ITA 2007 for relief in respect of the section 64 amount for either or both of the tax years 2020-21 and 2021-22.
3
Condition B is that the person's total income for the tax years 2020-21 and 2021-22—
a
is nil, or
b
does not include any income from which a deduction could be made in pursuance of a claim under section 64 of ITA 2007 in respect of the section 64 amount.
4
The amount of the loss that may be relieved under this paragraph (“the deductible amount”) is—
a
if condition A is met, so much of the section 64 amount as cannot be relieved pursuant to the claim under section 64 of ITA 2007;
b
if condition B is met, the whole of the section 64 amount.
But see sub-paragraph (9) (limit on total deductions under this paragraph).
5
A claim for relief under this paragraph is for the deductible amount to be deducted (in accordance with whichever is applicable of sub-paragraphs (7) and (8)) in calculating the person's net income for one or more of the tax years 2018-19, 2019-20 and 2020-21 at Step 2 of the calculation in section 23 of ITA 2007 (which applies as if this paragraph were a provision listed in section 24 of that Act).
6
A deduction is to be made only from the profits of the trade (and accordingly subsection (2) of section 25 of ITA 2007 has effect as if this sub-paragraph were included in subsection (3) of that section).
7
This sub-paragraph explains how the deductions are to be made in a case where the person makes a claim under section 64 of ITA 2007 for relief in respect of the section 64 amount for the tax year 2020-21.
Step 1 Deduct the deductible amount from the profits of the trade for the tax year 2019-20.
Step 2 Deduct from the profits of the trade for the tax year 2018-19 so much of the deductible amount as has not been deducted under Step 1.
8
This sub-paragraph explains how the deductions are to be made in any other case.
Step 1 Deduct the deductible amount from the profits of the trade for the tax year 2020-21.
Step 2 Deduct from the profits of the trade for the tax year 2019-20 so much of the deductible amount as has not been deducted under Step 1.
Step 3 Deduct from the profits of the trade for the tax year 2018-19 so much of the deductible amount as has not been deducted under Step 1 or 2.
9
The total amount that may be deducted in accordance with sub-paragraph (7), or in accordance with Steps 2 and 3 in sub-paragraph (8), is limited to £2,000,000.
10
A claim for relief under this paragraph must be made on or before the first anniversary of the normal self-assessment filing date for the tax year 2021-22.