Income Tax Act 2007 section 95

Foreign trades etc: reliefs only against foreign income

Section 95 restricts how losses from trades, professions or vocations carried on entirely outside the UK can be relieved, limiting their use to offset against certain categories of foreign income only.

• Where a trade, profession or vocation is carried on wholly outside the UK and generates a loss, sideways relief for that loss can only be set against the person's qualifying foreign income — not against UK-source income.
• Trade income relief (meaning carry-forward trade loss relief or terminal trade loss relief) for the loss can only be set against qualifying foreign trade income, which is the profits of any trade, profession or vocation carried on entirely outside the UK.
• Qualifying foreign income includes qualifying foreign trade income and certain foreign employment or pension income as defined under ITEPA 2003, but it does not include any income taxed on the remittance basis under section 832 of ITTOIA 2005.
• A loss from a wholly overseas trade cannot be converted into a capital gains tax loss under section 261B of TCGA 1992 — it is explicitly excluded from that treatment.