Income Tax (Trading and Other Income) Act 2005

448 Restriction of losses on strips by reference to original acquisition cost

(1) This section applies if—

(a) a person makes a loss on the disposal of a strip (apart from this section), and

(b) the person’s original acquisition cost for the strip exceeds the amount that falls to be brought into account as the amount payable on the disposal of the strip in determining the amount of the loss.

(2) If the amount that falls to be brought into account as the amount paid by the person to acquire the strip in determining the amount of the loss exceeds the person’s original acquisition cost for the strip, the amount of the loss is reduced.

(3) The amount of the reduction is A − B where—

• A is the person’s original acquisition cost for the strip, and

• B is the amount that falls to be brought into account as the amount payable on the disposal of the strip in determining the amount of the loss.

(4) If subsection (2) does not apply, the person is treated as not making a loss on the disposal.

(5) In this section any reference to making a loss on the disposal of a strip has the meaning given in section 446(3) and (4).