Taxes Consolidation Act 1997 section 381A

Restriction of loss relief in certain cases

Section 381A restricts the ability of part-time land dealers and developers to claim loss relief under section 381 in respect of certain losses arising from interest on borrowings or write-downs in the value of development land held as trading stock.

• The restriction applies to a "specified trader" — an individual whose income from dealing in or developing land is less than 50% of their total aggregate income (computed for USC purposes) across the current and two preceding tax years.
• A "specified loss" is a trading loss arising from either interest on borrowings used to purchase or develop land held as trading stock, or a write-down in the value of such land.
• A section 381 claim in respect of a specified loss may not be made unless the relevant interest has actually been paid, or the land write-down has been realised through a disposal, before the claim is made.
• Even where a disposal has occurred, no loss relief is available if the land was disposed of to a connected person; disallowed losses may, however, be carried forward under section 382.

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