BLM01010 | Introduction: anti-avoidance rules: sideways loss relief

This manual is being updated to reflect FRS 102 (2024 amendments). For guidance on the tax treatment of accounts prepared under IFRS 16 or the revised FRS 102, please refer to pages within the BLM50000 chapter.

ITA07/S75 (previously ICTA88/S384) provides that where a claim to sideways loss relief is made, and part of that loss derives from capital allowances in respect of expenditure on the provision of plant or machinery for leasing in the course of a trade, that part of the loss cannot be set off against other income, unless

• the trade is carried on by the claimant (alone or in partnership) for a continuous period of at least six months in, or beginning or ending in, the year that the loss is sustained, and

• they devote substantially the whole of their time to carrying on the trade (alone or in partnership) throughout the year or, if it is set up or permanently discontinued (or both) in that year, for a continuous period of at least six months beginning or ending in that year.

The object is to deny the benefit of trading treatment for what is, in substance, merely a form of investment.