Revenue has issued a new Tax and Duty Manual which includes details of certain restrictions to income tax relief available for losses sustained by an individual in the course of a trade or profession under section 381 Taxes Consolidation Act 1997 (TCA 1997).

Under section 381 TCA 1997, individuals may elect to have the loss offset sideways against other income of the individual, or in the case of joint assessment, against the income of the individual’s spouse or civil partner.

Finance Act 2014 introduced two new provisions which restrict the relief available where the loss arises from a hobby or passive trade or from a tax avoidance arrangement. Where an individual carries on a trade in a non-active capacity during a year of assessment, relief is capped at €31,750 per year of assessment regardless of how many non-active trades are carried on.

The manual provides worked examples of the operation of the relief and Revenue eBrief No. 54/16 here gives further details.