From 6 April 2013, the amount of Income Tax relief that may be claimed in respect of certain previously unrestricted Income Tax reliefs is capped.

This is a freeview 'At a glance' guide to caps on unrestricted tax reliefs.

Subscribers see Limit (cap) on income tax relief for your detailed version, which contains examples, planning points and outlines pitfalls.

The cap only affects an Income Tax relief that is unrestricted when anyone seeks to claim more than £50,000 in relief.

The cap restricts the amount of the relief available to the higher of:

  • £50,000.
  • 25% of adjusted net income.

Outline of the cap

The following Income Tax reliefs against an individual's general income are capped from 6 April 2013.

• Trade loss relief against general income.

• Early trade losses relief. 

• Post-cessation trade relief.

• Property loss relief against general income.

• Post-cessation property relief.

• Employment loss relief.

• Former employees deduction for liabilities.

• Share loss relief on non-Enterprise Investment Scheme (EIS) / Seed Enterprise Investment Scheme (SEIS) shares.

• Losses on deeply discounted securities held since at least 26 March 2003.

• Qualifying loan interest.

The restriction does not affect Gift Aid donations.

An individual’s Adjusted net income is calculated for the purposes of the limit as their total income liable to Income Tax adjusted to include an individual’s charitable donations made via payroll giving and to exclude pension contributions.

The limit applies to the year of the claim and any earlier or later year in which the relief claimed is allocated against total income. The limit does not apply to relief offset against profits from the same trade or property business.


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