Taxes Consolidation Act 1997 section 409D

Restriction of reliefs where individual is not actively participating in certain trades

Section 409D restricts the use of tax reliefs by passive investors in certain specified trades, ring-fencing any losses or capital allowances to income from those trades only.

• A "specified trade" covers electricity generation, oil and gas exploration and exploitation, and film and music production and exploitation; an individual is a passive investor (not an "active trader") if they do not spend the greater part of their time working in or managing the trade.
• The restrictions apply from the year of assessment 2002 onwards for electricity generation, and from 2003 onwards for all other specified trades, in any year in which the individual carries on the trade otherwise than as an active trader.
• Where the restrictions apply, losses and capital allowances that would otherwise be available under sections 305 and 381 may only be offset against income from the specified trade itself — they cannot be set against the individual's other income such as employment, rental or professional income.
• The measure has no effect on individuals who genuinely carry on any of the targeted trades on a full-time, active basis; it is directed solely at those who are in substance investors with no day-to-day involvement in the trade.