Income Tax Act 2007 section 153

How relief works

Section 153 sets out the mechanical process for deducting allowable losses from relevant miscellaneous income, working through the loss-making year first and then carrying any unrelieved balance forward to subsequent years.

• A loss is first set against relevant miscellaneous income of the same tax year in which the loss arose.
• Any unrelieved balance is then carried forward and deducted from relevant miscellaneous income of the next tax year.
• This carry-forward process repeats year by year until the loss has been used up entirely.
• The amount that may be deducted at any stage is capped by the rules in section 25(4) and (5), which prevent a deduction from exceeding the income available at the relevant step in the tax calculation.