Finance Act 2013

ITA 2007

54 (1) In Part 4 of ITA 2007 (loss relief), Chapter 2 (trade losses) is amended as follows.

(2) In section 64 (deduction of losses from general income), in subsection (8), after paragraph (ba) insert—

“(bb) section 74E (restriction on the relief and early trade losses relief where cash basis applies),”.

(3) In section 72 (relief for individuals for losses in first 4 years of trade), in subsection (5), after paragraph (ba) insert—

“(bb) section 74E (restriction on the relief and trade loss relief where cash basis applies),”.

(4) After section 74D insert—

“Restriction on sideways relief and capital gains relief where cash basis applies

74E No relief where cash basis used to calculate losses

(1) This section applies if—

(a) a person makes a loss in any trade in a tax year, and

(b) an election under section 25A of ITTOIA 2005 (cash basis for small businesses) has effect in relation to the trade for that tax year.

(2) No sideways relief or capital gains relief may be given to the person for the loss.

(3) For the purposes of this section—

(a) capital gains relief is, in relation to a loss, the treatment of a loss as an allowable loss by virtue of section 261B of TCGA 1992 (use of trading loss as a CGT loss), and

(b) capital gains relief is given for a loss when it is so treated.”