Income Tax Act 2007 section 104

Reliefs for limited partners not to exceed contribution to the firm

Section 104, as supplemented by Schedule 2 paragraph 27, ensures that the total tax reliefs a limited partner can claim in respect of a trade are capped at the amount they have contributed to the firm, and clarifies which historic reliefs and income amounts fall within that cap.

• The cap on relief for limited partners extends to loss reliefs previously claimed under the old ICTA rules (sections 380 and 381), which allowed trading losses to be set against general income.
• Capital allowances that would formerly have counted towards a limited partner's aggregate relief amount under ICTA section 117 (via the transitional rules in Schedule 2 to the Capital Allowances Act 2001) are also included within the cap.
• Any trading loss that was treated as an allowable capital loss under section 72 of the Finance Act 1991 counts towards the limited partner's cumulative relief for the purposes of this restriction.
• When calculating income from the trade (which effectively increases the headroom for future relief), amounts treated as received under section 74 of the Finance Act 2005 are included.