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A person who has sustained a trading loss in a tax year can claim relief from income tax by deducting the amount of the loss from their other general income of the year of the loss or the previous year¹, provided the trade is 'commercial'²; see What is a commercial trade? below.

It is also possible to make an additional claim for offset against capital gains, to the extent that the loss cannot be offset against the other general income³.

The relief against general income (along with relief for losses in the early years of a trade, see B8.206) is referred to as 'sideways loss relief'. There are several restrictions on this relief, namely:

1. Ìý

   •ÌýÌýÌýÌý it is not available under anti-avoidance rules if the loss derives from a first year allowance or an annual investment allowance on plant and machinery used for leasing and specific arrangements are in place in respect of the trade or the asset, see B5.417⁴

2. Ìý

   •ÌýÌýÌýÌý losses from