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Of key importance in quantifying losses available to partners is establishing whether a 'partnership' loss can actually be utilised by the partners concerned. This is because, once a partnership loss has been allocated to a partner, there are several provisions that operate to restrict 'sideways' loss relief.

The restrictions apply generally to corporate and non-corporate limited partners and members of LLPs. They also apply to individual non-active partners.

Sideways loss relief is, essentially, loss relief against other income of the partner. More specifically it is defined as follows:

1. Ìý

   •ÌýÌýÌýÌý corporate tax partners — relief against total available profits of the same accounting period, preceding accounting period or later accounting period and group relief¹

2. Ìý

   •ÌýÌýÌýÌý non-corporate tax partners — relief against general income and gains in the current year or preceding year (or preceding three years for trading losses incurred in the first four years of trading)²

The legislation restricts relief against income from other sources. It does not restrict relief against income derived from the same trade,