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Order of set-off of losses and other reliefs

Do trading losses have to be offset first or can other reliefs

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I have a client who has made a trading loss in the year of £15K, has other income of £10K, has eligible interest relief available of £6K and a chargeable gain of £50K. If he wishes to offset the loss against general income and gains, does he have to use it "first" or can he claim the interest first and then the loss, thereby making an extra £6k of loss available to offset against the gain?

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By Tax Dragon
29th Jan 2020 18:39

Ch3 of Pt2 of ITA.

(I think losses are step 2 or 3 and interest is step 6.... but it breaks down different types of losses and interest so defo defo read the sections.)

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By jcace
30th Jan 2020 02:31

Thanks for the reply TD
As far as I can make out, both s64 loss relief and interest relief are deducted at step 2, but I can't see whether one takes precedence over the other

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By Tax Dragon
30th Jan 2020 07:44

If they're both at the same step then you take them off in the order that gives the greatest tax saving. One of the later sections - 25, 26, 27? - provides for that.

At least, thought that was the case. I'm snowed this morning but should have time to check this afternoon.

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By jcace
30th Jan 2020 08:43

Thanks again TD, much appreciated in this snowy season

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