What does paragraph 18 of Schedule 2 to the Income Tax Act 2007 do?

Paragraph 18 provides transitional rules ensuring that losses carried forward from tax years before 2007-08 are preserved despite the repeal of older ICTA 1988 provisions. The old rules still determine whether a loss exists and its amount, but actual relief from 2007-08 onwards must be given under Part 4 of the Income Tax Act 2007.

How are pre-2007-08 carry forward losses given relief under the Income Tax Act 2007?

Although the older ICTA 1988 provisions determine the existence and extent of the loss, the mechanics of giving relief for 2007-08 or later years follow Part 4 of the Income Tax Act 2007. This means the new Act's ordering rules, restrictions, and procedures apply when the relief is actually claimed and used by the taxpayer.

Which older loss provisions are preserved by paragraph 18 of Schedule 2?

The preserved provisions cover losses carried forward from UK and overseas property businesses, trades, professions, vocations, and miscellaneous sources under various sections of the Income and Corporation Taxes Act 1988. Any provision that inserted, amended, or affected those superseded carry forward rules is also preserved for determining pre-2007-08 entitlements.

Can a sole trader who made a trading loss before 2007-08 still carry it forward under the new Act?

Yes. Under paragraph 18, the old ICTA rules still determine that the sole trader has a valid carry forward loss and its remaining amount. When the trader claims relief against trading profits from 2007-08 onwards, the relief is given under Part 4 of the Income Tax Act 2007, delivering the same result through the new legislative framework.

Income Tax Act 2007 Schedule 2 paragraph 18

General: carry forward loss reliefs

Paragraph 18 of Schedule 2 provides transitional rules for losses carried forward from tax years before 2007-08, ensuring that the repeal of older legislation does not disrupt existing loss relief entitlements while requiring the actual giving of relief to follow the new Act's procedures.

The repeal of older carry forward loss provisions by the 2007 Act does not change whether or to what extent pre-2007-08 losses qualify for relief in 2007-08 or later years
Where relief is actually given for 2007-08 onwards, it must be given under the relevant provisions of Part 4 of the Income Tax Act 2007
The superseded provisions cover losses carried forward from property businesses, trades, professions, vocations, and miscellaneous sources under various sections of the Income and Corporation Taxes Act 1988
Any provision that inserted, amended, or affected the application of the superseded carry forward rules is also preserved for the purpose of determining pre-2007-08 loss entitlements

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