Tx notes fa22 Final

Calculate Kathy’s taxable gains for 2022/23, assuming that Kathy makes the loss relief claim. 
5. Losses in opening years 
A special loss relief for losses arising in the 
first four tax years of trade
.
๏
Loss is 
carried back three tax years
on a 
FIFO basis
, against 
total income
.
๏
One claim applies to all three years and may generate a refund of income tax.
๏
The relief is all or nothing: it cannot be restricted to preserve the PA. 
Calculating a trading loss in the opening years:
๏
The normal opening year basis of assessment rules apply to profits and losses.
๏
However, there are 
no overlap losses
– losses can only be relieved once. 
 
Example 4 
Matthew starts trading on 1 August 2021. His trading results, as adjusted for tax purposes are:
Calculate Matthew’s trading profit assessments and the losses available for relief in respect of 
all relevant tax years. 
£
10 months to 31 May 2022
Loss
(20,000)
Year ended 31 May 2023
Profit
48,000

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Example 5 
Fiona started trading on 1 July 2020. Her results, as adjusted for tax purposes, for the first two years 
are as follows:
Fiona had previously been employed.
Her remuneration from this employment, which ceased on 30 September 2020 for recent years was:
Fiona has property income of £4,500 p.a.