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Documents for Business
In excess of 1,000 customisable documents covering every conceivable business issue.Introduction to this document
Pre-incorporation losses claim
If an unincorporated business is transferred to a company and at the time it has losses, the business owner can, subject to conditions, claim relief for them against income they receive from the company.
Incorporation
Losses made by an unincorporated business is used to reduce tax payable on past or future profits of the business or other income of the business owner. Where a business is transfered to a company any unused losses cannot be transferred with it. However, tax relief for them might still be possible by making a special loss claim
Derived income
The owner of unincorporated business can make a claim under s.86 Income Tax Act 2007 for tax relief for the losses, and income they derive from the company, e.g. as salary and dividends.
For s.86 to apply, the individual who transferred the business (or in the case of a partner, their share of it) must have received payment only in the form of shares in the new company, and the company must carry on the same trade as the business transferred. Use our Pre-incorporation Losses Claim to claim relief under s.86.
Timing
A claim for s.86 loss relief must be made no later than four years from the end of the tax year for which the relief is claimed.
