386 Determination of terminal loss

Summary

This section provides for the method of calculation of the amount of the terminal loss available for relief.

Details

Computation of capital allowances and losses

(1) The term “the relevant capital allowances” means the capital allowances, exclusive of allowances brought forward from an earlier year, to be made in charging the profits/gains of the trade or profession for a year of assessment.

In the computation of —

• the loss (if any) sustained by the person in the year of assessment the trade or profession is permanently discontinued, and
• the loss (if any) sustained in the part of the preceding year of assessment beginning 12 months before the trade or profession is permanently discontinued,

losses are to be computed in the same way as profits would be for the purposes of Cases I and II of Schedule D.

Calculation of amount of terminal loss

(2) The amount of the terminal loss consists of the sum of 4 elements in so far as they arise. These amounts are only included in so far as relief has not already been given in respect of any of them under some other provision. The amounts are —

• the loss sustained in the year of assessment in which the trade or profession is permanently discontinued;
• the relevant capital allowances for that year;
• the loss sustained in the part of the penultimate year of assessment beginning 12 months before the date of discontinuance;
• the proportion (on a time basis) of the relevant capital allowances for the penultimate year of assessment appropriate to the part of that year beginning 12 months before the date of discontinuance.

Relevant Date: Finance Act 2019