Income Tax Act 2007 section 110

Reliefs for non-active partners not to exceed contribution to the firm

Section 110 restricts the amount of loss relief that a non-active partner can claim in the early years of a trade, ensuring that the total relief does not exceed the partner's capital contribution to the firm. This paragraph clarifies which older reliefs and income amounts are caught by that restriction.

• Loss relief previously available under sections 380 and 381 of ICTA (allowing trade losses to be set against general income) falls within the scope of the restriction on non-active partners.
• A loss treated as an allowable capital loss under section 72 of the Finance Act 1991 is also caught by the restriction.
• These provisions are subject to the further modifications set out in paragraph 33 of Schedule 2, which may alter or disapply the restriction in certain circumstances.
• Amounts treated as income received under section 74 of the Finance Act 2005 count as income for the purpose of measuring the cap on relief available to the non-active partner.