Income Tax Act 2007 Schedule 2 paragraph 31

Non-active partners: carry-forward of losses

Paragraph 31 of Schedule 2 provides transitional rules ensuring that loss relief restrictions which applied to non-active partners under the old ICTA legislation carry through into the new ITA 2007 framework for the carry-forward of unrelieved losses.

• Losses that were blocked from sideways relief or capital gains treatment under the old ICTA rules are included in the pool of unrelieved losses brought forward under section 113
• References to sideways relief in the new legislation are read as also covering the equivalent ICTA relief provisions (sections 380 and 381)
• References to capital gains relief in the new legislation are read as also covering the old treatment of losses as allowable capital losses under section 72 of the Finance Act 1991
• The carry-forward mechanism in section 113 applies equally to losses originally restricted under the corresponding ICTA provisions, ensuring continuity across the old and new regimes