Early trade losses relief (UK individuals)
An individual may claim relief for a qualifying trading loss in the tax year the trade begins or one of the next three tax years against net income of the three tax years preceding the loss year, starting with the earliest. Statutory conditions, restrictions and claim deadlines apply; this relief differs from terminal loss relief.
Worked example
A trader makes a qualifying £12,000 loss in their first tax year and has £20,000 eligible net income in the earliest of the preceding three years. Assuming all conditions and limits are met, an early-loss claim can deduct £12,000 from that year’s net income.
Common mistake
Applying the relief to the most recent prior year first or assuming an early loss automatically qualifies without a claim.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |