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During my revision, I’ve come across this so many times: Try not to waste your QCD, Personal Allowance or any other types of reliefs available such as those two.
My question is, why is it bad to lose them? Say, if the loss relief ends up wasting QCD, but the TTP ends up as nil, then what is the difference from QCD reducing the TTP to nil?
QCD and PA both are deductible from total income…in other words we donot pay any tax on them
So whts the point in utilising such income. Its better to utilise the loss …where we are being charged tax …..and by the use of loss …we reduce the tax liability .
I hope it helps
If we reduce the total profits of a company by either a QCD of 10,000 or a loss of 10,000 then for this period the TTP is nil as you say and hence no difference in this period.
If the loss is used then the QCD is wasted and cannot be used in any other accounting period. If however we could have utilised the QCD then there would be an extra 10,000 loss to reduce profits of another accounting period.
As a loss must be uesd before QCD we are effectively having to use an extra 10,000 of the loss to reduce a total profit that would have been reduced to nil anyway by the use of the QCD.
The loss if unused this period may be used in another period, but if the QCD is unused this period then it is lost/wasted.
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