Income Tax Act 2007 section 119

How relief works

Section 119 explains the step-by-step process for deducting a trade loss carried forward against future profits of the same business.

• A trade loss is first deducted from the profits of the same business in the next tax year.
• Any remaining unrelieved loss is then carried forward and deducted from the business profits of the following tax year.
• This carry-forward process continues into successive tax years until the entire loss has been used up.
• The amount that can be deducted at each stage is subject to the capping rules in section 25(4) and (5).