Taxes Consolidation Act 1997 section 396A

Relief for relevant trading losses

Section 396A ring-fences relevant trading losses so that they can only be set against trading income taxed at the 12.5% rate, and not against a company's total profits.

• A "relevant trading loss" is a loss from a trade whose income is taxable at 12.5%; it excludes losses from excepted trades (taxed at 25%) and certain ring-fenced leasing losses.
• Such losses cannot be relieved against total profits under section 396; they may only be set sideways or backwards against relevant trading income, certain insurance and life assurance shareholder income, and foreign dividend income taxable at 12.5%.
• Where a relevant trading loss is carried back, it is set against income of a preceding accounting period equal in length to the loss period, ending immediately before it; if that prior period falls only partly within the permitted time, the available relief is apportioned accordingly.
• A claim for relief under this section must be made within two years of the end of the accounting period in which the loss is incurred.

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