ATXP6 UK
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Question 4b ii

Rod has requested advice in the potential income tax relief available in respect of his share of a trading loss of a partnership which he has recently joined.

Rod:
– Is resident and domiciled in the UK.
– Was employed for many years by Lumba plc, before taking early retirement on 30 June 2018.
– Joined the Thora Partnership on 1 December 2018.
– Made no disposals for capital gains tax in the tax year 2018/19, other than the sale of his shares in Lumba plc (as detailed below).

Rod's losses calculated in b(i) are as follows:
18/19 Loss:   (£9,667)
19/20 Loss:   (£19,333)

Rod’s income in the tax years 2015/16 to 2018/19:
Tax year Employment income Dividends
£ £
2015/16 82,000 0
2016/17 90,000 16,000
2017/18 86,000 12,000
2018/19 26,000 8,000

Required:
(ii) State how Rod is able to relieve the trading loss(es) calculated in (b)(i) above as early as possible, and explain, with supporting calculations, the total amount of income tax saved if Rod follows this strategy.

Note: You should assume the tax rates and allowances for the tax year 2018/19 apply to all tax years. (8 marks)