1. Incorporating loss making trade
1.1. Pre-incorporation loss offset against income from the company
1.1.1. e.g. salary, dividend, interest
1.2. Must meet all qualifying conditions
1.2.1. Individual carried on trade as a sole trader
1.2.2. Trade was transferred to the company
1.2.3. Consideration for transfer = wholly or mainly shares in the company
1.3. Individual must still own the shares in the year claim made
1.4. Company must carry on the trade throughout the year of claim
2. Post-cessation trade loss relief
2.1. Claim to offset post-cessation expenses against general income and chargeable gains
2.2. Applies to certain expenditure incurred within 7 years of cessation
2.2.1. Costs of remedying or paying compensation for defective work or supplies
2.2.2. Costs of insuring against such liabilities
2.2.3. Costs of collecting debts
2.3. Claim within 4 years of the end of the tax year
3. Terminal loss relief
3.1. Terminal loss made up of 2 parts
3.1.1. Part A: profit / loss in terminal period from 6th April to the end of the terminal period less any overlap profits
3.1.2. Part B: profit / loss from start of terminal period to 5th April
3.1.3. If Part A or B is a profit, treat as £nil
3.2. Terminal period = final 12 months of trading
3.3. Terminal loss can be set against profits of the same trade in the current and 3 previous tax years
3.3.1. Later years first (LIFO)
3.4. Claim within 4 years of the end of the tax year
4. Early trade loss relief
4.1. Trade loss in:
4.1.1. Tax year trade commenced
4.1.2. Any of the next 3 tax years
4.2. Carry back against general income of 3 preceding tax years
4.2.1. First-in-first-out basis
4.3. Not possible to restrict offset to preserve personal allowance
4.4. Claim by first anniversary of normal self-assessment filing date
5. Restrictions on early trade loss relief
5.1. Relief subject to a cap
5.1.1. Higher of £50,000 and 25% of income
5.2. Relief not available in certain circumstances
5.2.1. Where trade not carried on on a commercial basis with a view to profit
5.2.2. Where, subject to certain conditions, the trade was previously carried on by the person's spouse
5.2.3. Where the loss has been calculated using the cash basis
5.3. £25,000 cap for 'non-active' traders
5.3.1. Generally, less than 10 hours per week