82 Pre-trading expenditure

Summary

This section provides relief for expenditure (pre-trading expenditure) incurred for the purposes of a trade or profession before the trade or profession actually commences. Any such expenditure which is wholly and exclusively laid out for the purposes of the trade or profession in a 3 year period before commencement is allowed as a deduction in calculating the trading income of that trade or profession following commencement. Relief in respect of the expenditure is not available under any other provision of the Tax Acts. This section applies only in relation to trades and professions which have commenced on or after 22 January, 1997.

Where a company, other than the company who incurred the pre-trading expenditure, commences the trade, Revenue is prepared to treat such pre-trading expenditure as having been incurred by the company that commenced the trade. Such treatment is permitted where relief would be allowed under the provisions of section 400, if the transfer had taken place after the commencement of the trade.

Details

(1) The deduction for pre-trading expenditure is only available for the purposes of a trade or profession which is set up and commenced on or after 22 January, 1997.

(2) A deduction is allowable for pre-trading expenditure in computing income under Cases I and II of Schedule D where —

• it is incurred in the 3 years before the commencement of the trade or profession,
• it is not, otherwise than by virtue of this section, an allowable deduction, but would have been allowable in computing income under Case I or II of Schedule D had the expenditure been incurred after the commencement of the trade or profession.

(3) Pre-trading expenses related to a trade or profession may not be taken into account in calculating a loss to be set-off against other income whether under section 381 in the case of income tax or under section 396(2) or 420 in the case of corporation tax. Any losses resulting from pre-trading expenses may only be carried forward for use against future income of the trade or profession.

(4) If expenditure qualifies for relief under this section, relief may not be given in respect of the expenditure under any other provision of the Tax Acts.

Relevant Date: Finance Act 2021