Income Tax Act 2007 section 104

Restriction on reliefs for limited partners

Section 104 limits the amount of sideways relief and capital gains relief that a limited partner can claim for trade losses, ensuring total relief does not exceed their financial contribution to the firm.

• Where an individual carries on a trade as a limited partner and makes a loss, their ability to use that loss against other income or capital gains is capped.
• The cap is set at the individual's contribution to the firm, measured at the end of the basis period for the relevant tax year, as defined in section 105.
• The cap takes into account all sideways relief and capital gains relief previously given for losses from the same trade while the individual was a limited partner or a non-active partner, reduced by any amounts previously clawed back under the excess relief recovery rules in section 792.
• Where the firm carries on more than one trade, the restriction is applied by aggregating relief and recovered amounts across all of those trades.