- This topic has 4 replies, 4 voices, and was last updated 8 years ago by
.
- Posts
Sir,
Kindly make me clear about the following:-
It is told that Trading loss can be set off against the General income to the maximum of either 50000 or 25% if Adjusted income. Also stated this limit is not applicable to the earlier trade loss. My query is so while calculating the adjusted income for 25% purpose we will include the trade income also ? explain with the following example:-
X 14/15 Trading income – 60000 Other income – 200000 so total adjusted income – 260,000
15/6 A Trading loss of 150,000
What is the maximum loss relief he can claim in 14/15 ? My understanding is (60000+ 260000*.25= 125,00)
Kindly confirm
Satheesh RV
Satheesh RV, where is it told that trading losses can be set of against the higher of 50,000 or 25% trading profits?
Let me know.
In group companies(Corporation Tax- Groups) loss reliefs are available for all the other members so far as their respective accounting periods correspond.
In individual companies (Tax Adjusted Losses- Companies) loss reliefs can be applied both in next years or last one year (that is 12 month period)
All to the extend that the loss is totally written off against the trading profits.So please show me where your assertion can be found.
ThanksMy question was with respect to individuals.. not corporate . kindly refer the page No-49 Of Text by option tutions
Thanks
Hi Sateesh – an interesting question but an incredibly unlikely one! Hence why I have never seen your suggested scenario before but I would tend to agree that your answer would be correct – the only issue here being whether you would add to the 60,000 the 25% of 260,000 as you suggest or whether it would be 50,000 (as also 25% of 200,000 is 50,000) – I cannot confirm that as I have seen no reference to that in any of the study materials and as I am currently working overseas I do not have reference material with me. Might I suggest however that you focus on more important issues in respect of the exam anyway!
The £50,000 cap is only applicable to other income of £200,000 which means you can relieve against the entire amount of trading income(here it is £60,000).
So the maximum loss that can be carried back under s.64 loss relief claim is £60000 plus higher of:
•£50,000 and
•25% of £200,000(other income after deducting any gross amount of personal pension contributions)That is £110,000 (= £60,000 plus £50,000).
(Adjusted income means all income after deducting personal pension contributions. But keep in mind that trading income is not subject to £50,000 cap).
- You must be logged in to reply to this topic.