Can you please explain solution for this question? Especially how chargeable losses are relieved?
Also please explain the similarities and differences when calculating relieving trade losses for individuals and companies…I am now getting confused between the two
Samantha Fabrique has been a self-employed manufacturer of clothing since 2000. She has the following gross
income and chargeable gains for the tax years 2010/11 to 2013/14:
2010/11 2011/12 2012/13 2013/14
£ £ £ £
Trading profit/(loss) 7,290 52,600 (85,000) 13,390
Building society interest – 2,100 3,800 2,130
Chargeable gains/(loss) 20,600 23,300 (3,400) 14,000
The chargeable gains are stated before taking account of loss relief and the annual exempt amount.
(a) State the factors that will influence an individual’s choice of loss relief claims. (3 marks)
(b) Calculate Samantha’s taxable income and taxable gains for each of the tax years 2010/11, 2011/12, 2012/13
and 2013/14 on the assumption that she relieves the trading loss of £85,000 for the tax year 2012/13 on the
most favourable basis.
You should assume that the tax rates and allowances for the tax year 2012/13 apply throughout. (7 marks)
(Total = 10 marks)
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