Income Tax Act 2007 section 109

Unrelieved losses brought forward

Section 109 deals with how unreleived trading losses of an LLP member, previously blocked by the section 107 restriction, can be carried forward and treated as losses of a later tax year.

• Where section 107 has prevented an LLP member from claiming sideways relief or capital gains relief for trade losses in earlier years, those blocked losses can be carried forward to a later year in which the individual still trades as a member of the same LLP.
• The carried-forward losses are treated as though they arose in the current tax year, making them available for sideways relief or capital gains relief in that year, subject to the normal rules and the section 107 cap for the current year.
• A loss cannot be carried forward under this provision if sideways relief or capital gains relief has already been given (or could have been given had a claim been made) for that loss in an earlier year as a result of this same carry-forward mechanism.
• A loss is also excluded from carry-forward if any other form of income tax relief has already been granted for it, whether in a prior year or in the current year, under provisions unconnected with this section.