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hi tutor
i’m a bit confused with terminal loss relief
what i understood from the lecture video (last of chapter 7) is that the terminal loss is different from loss applied to other relief option (e.g: offset against Total income)?
we had a terminal loss of 19,500 & a “normal” loss of 20,500… which means if we opt for terminal loss relief, we have 1,000 less to offset
so why would a taxpayer opt for the specialist terminal loss relief as opposed to other available options?
If the taxpayer claims terminal loss relief of 19,500 he/she would still have available 1,000 (20,500 – 19,500) to use in a current year claim or carry back claim.
You must also remember that the reliefs target different figures of income and it is possible that not all of the 20,500 may be used if there is insufficient total income of current and preceding tax year or that little effective saving is in fact achieved as the total income figures being reduced would have been mostly covered by the personal allowances anyway!
Terminal loss relief remember targets just the adjusted trading profits of the taxpayer but for the preceding 3 tax years.
The preferred route is the one that saves the most tax!
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