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There are a number of tax reliefs available for self-employed taxpayers that make a loss carrying on their trade, profession or vocation (collectively referred to as a ‘trade’) and for their share of trading loss for any partnerships with which they are involved.

There are also constraints to loss relief claims that could see claims restricted or limited. For example, if the claimant:

  • worked for less than 10 hours a week on average on commercial activities of the trade
  • is a limited partner or a member of a limited liability partnership
  • has a trade which is carried on wholly overseas
  • has claimed certain capital allowances,
  • has income from oil extraction activities or oil rights

There is also an overall cap on certain Income Tax reliefs. The cap is set at 25% of income or £50,000, whichever is the greater. There is a separate type of loss relief available for those operating under the cash basis. No loss relief is available if the trade is not run commercially and for profit, for example if a trade is run as a hobby.

Source: New feed