Restriction on loss relief and illustration
You'll learn how the restriction on trade loss relief works and when it applies to your tax calculations. This restriction limits how much of a trade loss you can offset against non-trade income (like employment or property income), capping relief at the greater of £50,000 or 25% of your adjusted total income.
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In this lesson
- 0:00 Restriction on trade loss relief explained
- 1:02 How adjusted total income affects loss relief
- 1:34 Heidi's catering business loss relief scenario
- 2:22 Current year offset against total income
- 3:24 Prior year offset and loss carryforward
- 4:01 Uncapped relief against trade income
About this lesson
The key principle is that trade losses can be offset without restriction against trade income, but face a cap when used against other income sources. Through a worked example, you'll see how to claim loss relief across current and prior years while respecting these restrictions, and how to calculate what loss remains to carry forward.
Duration: 5m
Transcript
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