Income Tax Act 2007 Schedule 2 paragraph 25

Terminal trade loss relief

Schedule 2 paragraph 25 provides transitional rules for terminal trade loss relief where a trade permanently ceased in the early years of the new Income Tax Act 2007, ensuring losses could still be carried back to tax years governed by the old ICTA rules.

• This transitional provision applies where the final tax year of a trade is 2007-08, 2008-09 or 2009-10
• Terminal losses may be carried back and relieved against income of one or more of the tax years 2004-05, 2005-06 and 2006-07, depending on which is the final tax year
• Where relief falls to be given for any of those earlier years, it is given in the manner that would have applied under section 388 of the old Income and Corporation Taxes Act 1988, as if the 2007 Act had not been enacted
• Section 91 of the 2007 Act, which sets out how terminal loss relief works, must be read in a way that is consistent with this old-law treatment for those earlier years