Closing years losses and illustration
In this lesson, you'll learn how terminal loss relief works when a business ceases trading. This is a key tax relief available in the final 12 months of trade, and understanding how to apply it correctly is essential for Taxation papers.
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In this lesson
- 0:00 Terminal loss relief explained
- 0:09 How terminal loss relief works
- 0:34 Working through the calculation
- 1:02 Applying LIFO basis to prior years
- 1:21 Calculating remaining loss and tax position
About this lesson
You'll discover how closing year losses can be offset against trade profits in the year of cessation and then carried back against the prior three years on a last in first out basis. We'll walk through a complete worked example, showing you how to set up the pro forma, identify which losses can be relieved in each year, and calculate the resulting tax refunds and liabilities. By the end, you'll be confident applying terminal loss relief to exam questions and understanding why this relief matters for your clients' final tax positions.
Duration: 2m
Transcript
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