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Hello Sir, I hope you’re doing great!! please help me clear my confusion….
Samantha Fabrique has been a self?employed manufacturer of clothing since 2008. She has
the following income and chargeable gains for the tax years 2018/19 to 2020/21:
2018/19 2019/20 2020/21(estimated)
£ £ £
Trading profit/(loss) 21,600 (81,900) 11,650
Building society interest 52,100 3,800 1,850
Chargeable gains/(loss) 53,300 (3,400) 12,200In the answer scheme to this KAPLAN KIT ques, where we have to relieve loss on most favorable basis, an extract is:
Taxable gains 2018/19
£ £ £
Chargeable gains 53,300
Less : Trading loss relief (10,300)How can they extend trading loss relief to Capital gains when in 18/19 the total income has not reduced to zero due to CAPS……… it contradicts with what’s written in study text. Where am I going wrong sir?
Thank you for your question and the problem is not yours but is my use of language in the note that you quote!
I assume you understand where the figure of 10,300 comes from (if not then please ask) and that you understand the first note in section (d)
“This relief is an extension to a current year and/or carryback relief claim against total income and may only be claimed after such a claim has been made against the total income of the tax year of claim.”
This is the key point, but the second note was an attempt to simplify the issue as I believe the cap would be unlikely to be examined in this scenario. This question however does exactly that so I will amend the note accordingly to cover this possibility!
Thank you for bringing this to my attention!
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