Income Tax Act 2007 section 76

First-year allowances and annual investment allowances: introduction

Section 76 introduces restrictions on sideways loss relief where the loss arises from annual investment allowances or first-year allowances.

• Sideways relief allows trading losses to be set against other income, but this section limits that ability in certain circumstances.
• The restriction applies to the portion of a trade loss that derives from an annual investment allowance or a first-year allowance under the Capital Allowances Act 2001.
• The restriction is triggered when either of two specific conditions is met: one relating to partnerships that include company members (section 77) and another relating to arrangements designed to reduce tax liabilities (section 78).
• Only the part of the loss attributable to these allowances is denied sideways relief; any remaining loss from other sources may still qualify.