Taxes Consolidation Act 1997 section 386

Determination of terminal loss

Section 386 sets out the method for calculating a terminal loss in a trade or profession for the purposes of section 385.

• A terminal loss is the aggregate of losses and unused capital allowances arising in the final 12 months before a trade or profession permanently ceases.
• It includes the full loss sustained in the year of assessment in which the discontinuance occurs, together with the relevant capital allowances for that year.
• It also includes the loss sustained in the portion of the preceding year of assessment that falls within the 12-month window, together with a proportionate share of the capital allowances for that preceding year.
• Only amounts not already taken into account in reducing or relieving income tax elsewhere are included in the terminal loss calculation.