Sideways Loss Relief Calculator

Sideways loss relief (ITA 2007 s64) allows a trader with a self-employment or partnership trading loss to set that loss against other income (such as employment income, rental income, or dividends) in the same tax year, rather than waiting to carry it forward against future trading profits.

For genuine commercial trades: no cap — you can offset the full loss against other income. For uncommercial trades (those not run on a commercial basis with a view to profit), the relief is capped at £25,000 per year (ITA 2007 s74B).

Yes — under ITA 2007 s72, you can carry back a trading loss to the previous tax year and set it against other income in that year. The same commercial/uncommercial cap applies.

If your trading loss exceeds your other income, the excess is carried forward to be offset against future profits from the same trade. It cannot be sideways-relieved in a future year against different income.

Yes — there is a special rule for losses in the first four years of trade (ITA 2007 s72). These losses can be carried back three years against other income (unlike the one-year carry-back for established trades).

Farming losses face additional restrictions: the 'five-year rule' (ITA 2007 s67) prevents sideways relief if the trade has made a loss in each of the preceding five years, even if commercially run. This prevents hobby farming tax avoidance.

Reducing your taxable income via sideways relief may recover a lost personal allowance. Incomes between £100,000 and £125,140 lose the personal allowance at £1 per £2 over £100,000 — a sideways loss can restore this.

For most trades, no. However, Universal Credit claimants face a minimum income floor that treats them as having earned at least the National Living Wage regardless of actual trading results.