Commentary on Sections Overview Overview Section 75: Trade leasing allowances given to individuals
279.This section denies sideways relief in relation to losses derived from trade leasing allowances if the individual carrying on the trade does not meet the time commitment test. It is based on section 384(6) and (7) of ICTA.
280.Subsection (2) defines a “trade leasing allowance”.
281.The time commitment test requires that conditions A and B are met.
282.Subsection (5) sets out condition A. Its reference to “a continuous period of at least 6 months beginning or ending in the basis period for the tax year in which the loss was made” covers cases of a commencement or a cessation of the trade. In such cases the basis period may be shorter than six months.
283.Subsection (6) sets out condition B. Its reference to “a continuous period of at least 6 months beginning or ending in the loss-making basis period” also covers cases of a commencement or a cessation of the trade. In such cases the basis period may be shorter than six months.
284.The section removes an inconsistency in the source legislation between:
	the period during which substantially the whole of the individual’s time must be devoted to carrying on the trade;
	the period during which the individual must carry on the trade; and
	the basis period in respect of which the loss is calculated.
285.The inconsistency arose because of the change from the preceding year basis of assessment to the current year basis of assessment, made by FA 2004. This change resulted in losses being calculated by reference to basis periods ending in a tax year while the time commitment test continued to relate to the tax year itself. This section provides that the time commitment test also relates to the basis period in which the loss is made. See Change 10 in Annex 1.