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In summary, for continuing trades, current year trading losses may be relieved against the following:

1. •

   total income of the year of loss or the preceding year, or

2. •

   current year or preceding year capital gains, to the extent that losses cannot be relieved against current or prior year total income, or

3. •

   future profits arising from the same trade

ITA 2007, ss 83, 64; TCGA 1992, s 261B

This is discussed in detail in the Sole trader losses ― established trades guidance note, which also includes commentary about the temporary extension for the use of trading losses incurred in the 2020/21 and 2021/22 tax years. Relief for trading losses in opening and closing years is discussed in the Sole trader loss relief ― opening years and Sole trader losses on cessation guidance notes.

This guidance note focuses on the planning