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The Book-keepers Forum -> VAT, Payroll & Tax -> Self Assessment - Offsetting Losses
Post Info TOPIC: Self Assessment - Offsetting Losses
ChrisG


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Posts: 4
Date: Sun Jul 17 16:29 2011
Self Assessment - Offsetting Losses
 

Hi everyone,

Just wondered if anyone can help me with offsetting losses when completing a Self Assessment Tax Return. When claiming self employed losses against profits, does the whole loss have to be offset or can just part of the loss be used with the remainder carried forward?

For example, if in Year 1 a loss of £2000 is made, and in Year 2 a profit of £7000 is made, does the whole £2000 loss have to be offset against the £7000 profit or can just enough of the loss necessary to bring it below the personal allowance threshold be used, with the remaining unused loss being carried forward against year 3.

Hope that makes sense!

Many thanks in advance,

Chris

 



-- Edited by ChrisG on Sunday 17th of July 2011 04:32:37 PM



-- Edited by ChrisG on Sunday 17th of July 2011 04:38:21 PM

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gbm


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Date: Mon Jul 18 10:15 2011
 

Hi Chris,

Unfortunately it's the whole loss - even if it means wasting the personal allowance.

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Truemanbrown


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Posts: 60
Date: Tue Sep 13 23:44 2011
 

Hi Chris,

How long have you been trading? Because you have a number of ways of relieving the loss such as:-

  • relieving the loss against total income of this year and the preceding tax year;
  • in the first four years of trading, you can carry back the loss against total income of the previous three years (earliest year first). 

 

 



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Dangermouse


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Date: Wed Feb 15 14:06 2012
 

As an example of how regular bookkeeping can benefit a client, I mention that knowing these figures before the tax year is over means that decisions can be made to maximise the PA, especially if a client is carrying forward a loss from a previous year.

Nothing like mentioning that most of the income in the next month will be tax free if there is enough gaps between the loss/PA/income ratio. Can be very motivating and show how useful we are. That's my penn'orth.

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