Income Tax Act 2007 Schedule 2 paragraph 28

Reliefs for members of LLPs not to exceed contribution to the LLP

Schedule 2 paragraph 28 clarifies which earlier tax reliefs and income amounts are caught by the restriction in section 107 that limits the tax reliefs available to members of limited liability partnerships (LLPs) to the amount of their contribution to the LLP.

• Loss relief previously claimed under the sideways loss relief or early-years loss relief rules (sections 380 and 381 of ICTA 1988) counts towards the cap on reliefs for LLP members
• Losses previously treated as allowable capital losses under section 72 of the Finance Act 1991 are also included within the restriction
• When calculating relevant income for the purposes of the cap, amounts treated as received under section 74 of the Finance Act 2005 are taken into account
• The overall effect is to ensure that earlier legislation governing loss reliefs and deemed income is properly brought within the scope of the section 107 restriction, preventing LLP members from obtaining reliefs in excess of their actual financial exposure