Income Tax Act 2007 Schedule 2 paragraph 23

Sideways relief: trade leasing allowances given to individuals

Paragraph 23 of Schedule 2 provides a transitional rule ensuring that individuals are not disadvantaged by the restriction on sideways loss relief for trade leasing allowances when the 2007-08 basis period overlaps with the 2006-07 tax year.

• Where a trade loss in 2007-08 would be blocked by the new leasing allowance restriction in section 75, but the equivalent old rule under ICTA would not have blocked it, the new restriction is disapplied.
• The rule applies only where the basis period for 2007-08 overlaps with the 2006-07 tax year, creating a transitional mismatch between the old and new legislation.
• Both the 2006-07 loss and the 2007-08 loss must arise in the same trade, and relief for each must have been restricted under the respective old and new provisions.
• The effect is that section 75 does not prevent sideways relief for the 2007-08 loss (or the affected part of it), preserving the treatment the taxpayer would have received under the former ICTA rules.