Taxes Consolidation Act 1997 section 392

Option to treat capital allowances as creating or augmenting a loss

Section 392 allows capital allowances to be included in a section 381 loss relief claim so as to create or increase a trading loss for a year of assessment.

• A section 381 loss relief claim may include capital allowances for the year of the loss, even where without those allowances no loss would have arisen.
• Capital allowances can therefore both create a loss where the trade is otherwise profitable and increase an existing loss.
• Where the loss so computed exceeds total income, relief under section 381 is treated as having been given first against the loss computed without the capital allowances.
• Any capital allowances not absorbed by the claim are thereby preserved and may be carried forward to the next year of assessment.

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