Tx notes fa22 Final

4. Loss relief against total income 
(a)
A trading loss may be relieved against total income (after any qualifying loan interest payments) 
of the tax year of the loss and/or the preceding tax year.
‣
the loss is calculated on an accounting period basis. The accounting period is then 
assessed using the normal bases of assessment.
‣
a loss for the year ended 30 June 2022 (assessable in 2022/23 using CYB) may be 
relieved against total income of 2022/23 (the tax year of loss using CYB ) and/or 2022/23 
(the preceding tax year).
(b)
If relief against total income is taken,
‣
the loss must be set off to the maximum possible extent subject to a cap on income tax 
reliefs - see section (c) below.
‣
personal allowances may therefore be lost as total income is before the deduction of the 
personal allowance and partial claims are not allowed.
‣
a claim against total income may be made for either the tax year of the loss or the 
previous year or both. The two years are treated separately and thus a claim is required 
for each year.
£
Year to 31 December 2020
Loss 
(5,000)
Year to 31 December 2021
Profit
3,000
Year to 31 December 2022
Profit
10,000

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Example 2 
Charles has the following trading profit/(loss) results:
£
Year ended 31 December 2021
32,000
Year ended 31 December 2022
25,000
Year ended 31 December 2023
(84,000)
Charles also has property income in each year of £6,000.