my income in the tax year is less than the personal allowance

[richpi]

my income in the tax year 1 apr 08 – 31 mar 09 is less than the personal allowance, am i aloud to carry forward my expenses and capital allowances to use in future year’s tax returns to set against my income when it is over the personal allowance threshold? or am i allowed to claim tax back from previous years, using my 08/09 expenses and capital allowances?

many thanks for help,
richard

[David Griffiths]

You are not allowed to carry forward expenses. However you can waive the claim to capital allowances, so that the balance of expenditure carried forward is higher. Note that it's the unclaimed pool that is carried forward, not the actual allowances, so you only get one year's allowance in 2009-10 That's not the same as carrying the capital allowances forward.

For example, if you spend £1,000 this year, and claim nothing, next year your balance brought forward will be the £1,000 and your allowance will be 20% of that - £200.

A claim for tax relief against earlier years only applies if you have an actual trading loss - you cannot carry back or forwards unused personal allowances. If they are not used in the year of assessment they are lost

[richpi]

Hi David,

Thank you for responding to me. I’m sorry but can I just clarify what you mean?

“You are not allowed to carry forward expenses. However you can waive the claim to capital allowances, so that the balance of expenditure carried forward is higher. Note that it's the unclaimed pool that is carried forward, not the actual allowances, so you only get one year's allowance in 2009-10 That's not the same as carrying the capital allowances forward.”

I’m a little confused, your first sentence says I CAN’T carry forward expenses, then you seem to be saying I CAN carry expenses forward and that I can make the amount higher by not claiming my capital allowances???? What is the unclaimed pool? What question in the tax return would this be entered in? Just to be clear, are you referring to capital allowances when you say “you only get one year’s allowance in 2009-10?”


“For example, if you spend £1,000 this year, and claim nothing, next year your balance brought forward will be the £1,000 and your allowance will be 20% of that - £200.”

I’m sorry, my allowance for what? What question in the tax return would this be entered in?

“A claim for tax relief against earlier years only applies if you have an actual trading loss - you cannot carry back or forwards unused personal allowances. If they are not used in the year of assessment they are lost”

Thank you for this bit, this is what I suspected but I wasn’t sure.

Richard

[richpi]

Thank you very much for your advice, it was really most helpful

Richard