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The question below is in the tx 21 study text. it uses the terminal relief carry back against trading profit option. hence the terminal loss has to be calculated.
But what if in such a scenario the question asks us to choose the other option, which is simply the relief against total income (and then chargeable gain). what would our loss figure be? the same 7200 or do we have to find the terminal loss (last 12 months), and have relief over the terminal loss because the loss was for only 9 month?
Yves ceased trading on 30 June 2021. His final period of trade was the
nine months to 30 June 2021 and before that he prepared accounts
annually to 30 September.
His tax adjusted trading results are as follows:
Nine months to 30.6.21 Loss (7,200)
Year to 30.9.20 Profit 100
Year to 30.9.19 Profit 7,300
Year to 30.9.18 Profit 7,500
He has overlap profits of £1,800 brought forward.
Yves had no other sources of income.
Calculate the terminal loss available to Yves and show how relief
may be obtained for it.
i know that it would ridiculous to claim terminal loss relief against total income as it won’t be fully utilised and cant be carried forward as the business in ceasing, but just assume there were other income fit enough to claim the relief.
now as per my question at the start, would we ask a loss relief of 7200 against the total income or 8975 (terminal loss calculated) against the total income.
or do we only calculate the 12 months terminal loss when we select to claim relief using the terminal loss carry back relief option against trading income only?
The issue you raise is dealt with in the lectures that work through the OT study notes – it would appear therefore that you have not worked through the relevant lecture so you should do this work before asking any further questions – it is essential that you work through ALL the lectures before attempting the exam.