Income Tax Act 2007 section 74A

Reliefs in any tax year not to exceed cap for tax year

Section 74A caps the amount of sideways relief and capital gains relief available to a non-active sole trader who makes trading losses in a tax year.

• Where an individual carries on one or more trades in a non-active capacity (not as a partner) and makes a loss, the total sideways relief and capital gains relief for all such losses is capped at £25,000 per tax year
• If the individual also has losses as a non-active or limited partner subject to the separate restriction under section 103C, the £25,000 cap is reduced by the amount of relief given for those partnership losses
• The cap does not apply to losses derived from qualifying film expenditure, and it does not prevent trading losses from being set against profits of the same trade
• Lloyd's underwriting business is excluded from the definition of "trade" for the purposes of this section, and the Treasury may amend the £25,000 cap by order