Income Tax Act 2007 section 72

Relief for individuals for losses in first 4 years of trade

Section 72 provides a special form of loss relief for individuals who make losses in the early years of a new trade, profession or vocation, allowing those losses to be carried back against income of earlier tax years.

• An individual who makes a loss in the tax year a trade begins, or in any of the next three tax years, may claim early trade losses relief by carrying the loss back against net income of the three preceding tax years
• The loss is deducted in calculating the individual's net income for the three tax years before the tax year in which the loss arises, with relief given against the earliest year first
• The claim must be made by the first anniversary of the normal self-assessment filing date for the tax year in which the loss is made
• The relief is subject to several restrictions, including requirements that the trade is carried on commercially, general restrictions on tax-generated losses, rules relating to capital allowances, and ring fence income limitations