Loss relief may be restricted where, in a given tax year (‘the relevant tax year’), an individual sustains a loss in a trade he is carrying on as a limited partner in a firm (ITA 2007, s. 104). The restriction applies to ‘sideways relief’ (against the individual's other income) and to ‘capital gains relief’; see ¶263-250 for definitions of both of these terms. There is no restriction on the right to carry the loss forward and set it against future profits from the same trade.

The method of restricting the relief requires an understanding of three key terms (each considered in greater detail below):

‘relevant relief’;

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