Sole trader and PAYE

[thepilot]

Hi

Hopefully someone can give me some advice here.

I am an employee of a company that pays me a monthly salary through PAYE. I also recently setup a sole trader business that I am funding myself. I have put a fair bit of cash into the sole trader business to start it off and its currently running at a loss. When it comes to accounts etc and self assessment will I be able to claim losses in the business against my personal tax?

I'm just looking for an accountant to go over everything but I'd appreciate some advice as to how things work.

Thanks in advance

 

[Williams lester]

Yes, you can claim your sole trader losses against your PAYE tax, once you submit your self assessment the losses can be offset against other income.

 

[thepilot]

Many thanks, I assume that the self assessment form will have places for this info? I was looking to do the self assessment myself but its all getting too complicated so I'll chat to the accountant when I can get a meeting.

Thanks again for your reply

 

[MyAccountantOnline]

Many thanks, I assume that the self assessment form will have places for this info? I was looking to do the self assessment myself but its all getting too complicated so I'll chat to the accountant when I can get a meeting.

Thanks again for your reply

If you are going to appoint an accountant I'd get them to do your SA return - in that way you can be sure you have claimed all tax relief possible and got the Return correct.

If you want some informaton on losses have a look here -
http://www.hmrc.gov.uk/helpsheets/hs227.pdf

 

[thepilot]

Many thanks Nicola

I think that would be the best way forward....i'm getting cross eyed already and I've just read 2 documents on it!

 

[MyAccountantOnline]

Many thanks Nicola

I think that would be the best way forward....i'm getting cross eyed already and I've just read 2 documents on it!

The delights of our wonderful Self Assessment tax system

 

[Truemanbrown]

Hi

Hopefully someone can give me some advice here.

I am an employee of a company that pays me a monthly salary through PAYE. I also recently setup a sole trader business that I am funding myself. I have put a fair bit of cash into the sole trader business to start it off and its currently running at a loss. When it comes to accounts etc and self assessment will I be able to claim losses in the business against my personal tax?

I'm just looking for an accountant to go over everything but I'd appreciate some advice as to how things work.

Thanks in advance

If the loss you are making as a self employed person is quite material then you have other options on how to use that loss.

In particular, losses in the first four years of trade can be carried back against other income for the previous 3 years under a Section 72 Claim.

So if you made a loss of £10,000 for 2010/11 you can then relieve the loss against other income for 2007/08 and any other unrelieved loss can then be set off against other income for 2008/09 and 2009/10.

Remember, basic rate tax in 2007/08 was 22%.

So, if your income from employment is level at £30,000, you would get a tax refund of £2,200 if you made the Section 72 to carry back the losses to 2007/08 while you get a refund of £2,000 if you set off the loss against other income in 2010/11.

Are you at present claiming Children's Tax Credits? Obviously, you need to consider the effect the loss will have on your tax credit claim, if you make such a claim.

You will need to discuss the situation with your new accountant asap.