Tx notes fa22 Final

June 2023 to March 2024 exams
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Answer to Example 5
 
 
Taxable income computations
Loss relief: Opening years: 
Using opening years loss relief the loss of 2020/21 (£9,000) is set initially against Total Income of 
2018/19. Any loss remaining would then be set automatically against Total Income of 2019/20 and 
finally against Total Income of 2020/21. In this example however there is clearly su
ffi
cient income in 
2018/19 to absorb all the available loss of 2020/21. It does however result in some wastage of the 
personal allowance for 2018/19 The loss of 2021/22 (£3,000) is then set against Total Income of 
2019/20 (before relieving 2020/21 and 2021/22 had any loss remained).
Workings
(W1)
New business – assessments
2018/19
2019/20
2020/21
2021/22
2022/23
2023/24
£
£
£
£
£
£
Employment Income
15,800
11,050
5,868
Trading profit (W1)
Nil
2,500
Nil
Other income
4,500
4,500
4,500
4,500
4,500
4,500
Total income
20,300
15,550
10,368
4,500
7,000
4,500
Less: Opening years relief
(9,000)
(3,000)
–
–
–
–
Net Income
11,300
12,550
10,368
4,500
4,500
7,000
Less: Personal Allowances
(12,570)
(12,570)
(12,570)
(12,570)
(12,570)
(12,570)
Taxable income
Nil
Nil
Nil
Nil
Nil
Nil
YEAR
Basis of assessment - rules
Assessment
Loss
2020/21 (Actual) 1/7/2020 – 5/4/2021
Nil
9/12
×
(12,000) 
(9,000)
2021/22 (CYB)
y/e 30/6/2021
Nil
(12,000)
Less: used in 2020/21
9,000
(3,000)
2022/23
(y/e 30/6/2022)
2,500
Loss available:
2020/21
(9,000)
2021/22
(3,000)

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