Annex 1: Minor changes in the law Change 9: Trading losses: restrictions: withdrawal of capital ignored where amounts charged to tax as profits of a trade: sections 57 and 60
This change amends the way in which the trading losses of limited partners or members of limited liability partnerships are restricted.
One of the elements in the restriction of such a trading loss is the net amount contributed to the firm (the full amount contributed less any capital withdrawn) by the limited partner or the member of the limited liability partnership. It is,however, possible that amounts of capital withdrawn may be regarded for tax purposes as profits. In these circumstances it is inequitable to restrict loss relief by reference to those amounts. This change corrects this potential inequity.
This change is in taxpayers’ favour in principle and may benefit some in practice. But the numbers affected and the amounts involved are likely to be small.