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Paragraph 2(4) Schedule 1B sets out how the claim is to be quantified. It reads

(4) Subject to sub-paragraph (5) below, the claim shall be for an amount equal to the difference between-

(a) the amount in which the person is chargeable to tax for the earlier year (“amount A�); and

(b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (“amount B�).

The claim is quantified in terms of the tax difference in “the earlier year�. The “tax difference� is the tax that would not have been due in “the earlier year� if the claim could be and had been given effect to in that “earlier year�.

Example 1

Casey declared profits of £25,000 in her self-assessment return for 2018-19. Casey is now completing her tax return for 2019-20 and has made a loss of £10,000. Casey wishes to carry this back to 2018-19.

Casey’s claim is quantified as follows:

2018-19 original tax calculation (“amount A�)

Profits £25,000

Less Personal Allowance (£12,500)

£12,500

Tax at 20% £2,500

2018-19 tax calculation after effect is given to the claim (“amount B�)

Profits £25,000

Less Personal Allowance (£12,500)

Less Loss from 2019-20 (£10,000)

£2,500

Tax at 20% £500

Casey’s claim is calculated as the difference between “amount A� (£2,500) and “amount B� (£500).

Casey’s claim is, therefore, £2,000.

The claim is only quantified by reference to the earlier year. It remains a claim for the later year as that is the year in which the event giving rise to the claim occurred. For example, the year in which the loss arose.