Last chance for unlimited tax relief – it runs out next week!

A cap on unlimited income tax reliefs will come into force on 6 April 2013 on specific income tax reliefs claimed by individuals. The cap will be the greater of £50,000 or 25% of income.

The limit will only apply to certain reliefs, which are currently unlimited and will not apply to charitable reliefs or Enterprise Investment Scheme investments.

Who is losing out?

The main relief which is widely used is that of losses arising from trading which can be used against total income. For example, you trade as a retailer and you have income from working as a part time mobile party planner. Your shop makes a loss in the year and you set that loss against your total income for the year including your earnings as a party planner.

These reliefs were very useful in the past for new business start-ups as the relief was available for the first four years of trade. They were also available within seven years of a business ceasing but will now be capped.

The loss relief for property business losses arising from capital allowances or agricultural expenses will also be capped.

Another major relief which has been capped is that of qualifying loan interest, available for interest paid on certain loans. These include loans to buy an interest in certain types of company, or to invest in a partnership.

We’re here to help!

We will continue to review all of the possible tax reliefs available to you.

However, should you be considering a loan to buy an interest in a company or partnership, or feel that your business is not making the profits it has in the past, then please speak to us before the year end so that we can help and advise you of the tax reliefs available.

Any questions?

You can contact us on 0845 177 5007 or by email at [email protected] Alternatively, you can use the MJF Accountancy contact form.

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