Section 74 — Income Tax Act 2007: Restrictions on relief unless trade is commercial etc

Restrictions on relief unless trade is commercial etc 74 1 Early trade losses relief for a loss made by an individual in a trade in a tax year is not available unless the trade is commercial.

2 The trade is commercial if it is carried on throughout ... the tax year—

a on a commercial basis, and b in such a way that profits of the trade could reasonably be expected to be made in the tax year or within a reasonable time afterwards.

3 If the trade forms part of a larger undertaking, the reference to profits of the trade is to be read as a reference to profits of the undertaking as a whole.

4 Early trade losses relief for a loss made by an individual is not available if—

a the individual first carries on the trade at a time when the individual has a spouse or civil partner and is living with the spouse or civil partner, b the spouse or civil partner previously carried on the trade, and c the loss is made in a tax year falling after the relevant 4 year period.

5 The relevant 4 year period comprises—

a the tax year in which the spouse or civil partner first carried on the trade, and b the next 3 tax years.

6 This section applies to professions and vocations as it applies to trades.