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can I offset self employment loss against employment tax paid

Discussion in 'Accounts & Finance' started by tpee, Aug 23, 2010.

  1. tpee

    tpee UKBF Newcomer Free Member

    Posts: 4 Likes: 0
    This is my second trading year and have made a loss and was in employment paying PAYE prior to this. I have been reading online about carrying a loss forward and also that you may be able to take it back and claim against tax paid when employed to claim a refund. Any advise regarding this would be greatly appreciated as this would help a great deal at the moment. Thanks
  2. elainec100@cheapaccounting

    elainec100@cheapaccounting UKBF Regular Full Member

    Posts: 13,271 Likes: 2,870
    • Thanks Thanks x 1
  3. elainec100@cheapaccounting

    elainec100@cheapaccounting UKBF Regular Full Member

    Posts: 13,271 Likes: 2,870
    Info you need:

    Trade losses can be relieved in a number of ways:
    • by reducing your income for the year ended 5 April 2010 and if your
    income is nil or less than the loss
    • by reducing your capital gains for the year ended 5 April 2010
    • by claiming for relief to be calculated by reference to your income for
    earlier years or your capital gains for the year ended 5 April 2009
    • by claiming for relief to be calculated by reference to profits of the same
    trade taxed in earlier years
    • by carry forward against future profits of the same trade or income from
    the company (where you transfer your trade to a company in exchange for
    shares in that company), or post cessation receipts.
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  4. tpee

    tpee UKBF Newcomer Free Member

    Posts: 4 Likes: 0
    Hi, thanks for replying.
    I was employed up to May 08 when I got made redundant and set up my own business. I claimed some tax back on my 1st return that I had paid in this employment covering April and May as my Self Employed business didn't make as much as my personal allowance.
  5. elainec100@cheapaccounting

    elainec100@cheapaccounting UKBF Regular Full Member

    Posts: 13,271 Likes: 2,870
    Only the fact of it the losses will need to be carried forward and off set against future profits.

    I expect you claimed all of the tax back on paye earnings in 200/ / 2009.
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  6. David Griffiths

    David Griffiths UKBF Regular Moderator

    Posts: 9,953 Likes: 3,160
    Were you employed and paying tax in the years 2006-07 up to 2007-08?

    A loss in the first four years of a new business can be carried back and set against general income for the three preceding years, earliest first. So if your loss is in 2009-10 you can carry that back to 2006-07
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  7. tpee

    tpee UKBF Newcomer Free Member

    Posts: 4 Likes: 0
    Yes I was employed in 2006/07, so I can claim some tax back for this period based on my 09/10 trading loss?
  8. David Griffiths

    David Griffiths UKBF Regular Moderator

    Posts: 9,953 Likes: 3,160
    Yes. Put the loss in box 78. You will then need to write to HMRC quoting this loss and claiming relief against income of 2006-07

    This is a manual process and could take a couple of months (or more)
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  9. tpee

    tpee UKBF Newcomer Free Member

    Posts: 4 Likes: 0
    thank you very much.
  10. Duckpool

    Duckpool UKBF Newcomer Free Member

    Posts: 2 Likes: 0
    [Trade losses can be relieved in a number of ways:
    • by reducing your income for the year ended 5 April 2010 and if your
    income is nil or less than the loss
    • by reducing your capital gains for the year ended 5 April 2010
    • by claiming for relief to be calculated by reference to your income for
    earlier years or your capital gains for the year ended 5 April 2009
    • by claiming for relief to be calculated by reference to profits of the same
    trade taxed in earlier years
    • by carry forward against future profits of the same trade or income from
    the company (where you transfer your trade to a company in exchange for
    shares in that company), or post cessation receipts.[/quote]

    Is the above applicable to a sole trader only or does it apply to a limited company as well.

    I retired 2 years ago and receive a company pension. I started a limited company about the time I retired and have made a loss in both the first 2 years - can I offset these losses against the income (company pension) I receive?

    I would appreciate any guidance you can give.

    Regards
  11. Anna Chandley

    Anna Chandley UKBF Regular Free Member

    Posts: 1,389 Likes: 422
    You can't offset the company's loss against your personal income. The company loss will carry forward to be set against future profits of the same trade.


    Anna
    Last edited: Nov 12, 2012
  12. Duckpool

    Duckpool UKBF Newcomer Free Member

    Posts: 2 Likes: 0
    Anna

    Thanks for your prompt response.