Reclaiming Tax Losses

lmiddleham

Hi



I’m completing the very first tax return I’ve ever done.

It’s not as complex as I thought although a little long winded!

I’m having trouble with the loss section though. These are the options I had and you can see which options I’ve populated.


Income Tax losses
1. Earlier years' losses - which can be set against certain other income in 2009-10: £ Not Entered
2. Total unused losses carried forward: £ Not Entered
3. Relief now for 2010-11 trading, or certain capital, losses: £ 586.00
4. Tax year for which you are claiming relief in box 3, for example 2007-08 YYYY YY: 2009-10

Total taxable profits or net business loss
30. Total taxable profits from this business: £ Not Entered
31. Net business loss for tax purposes: £ 586.00


My aim is to get the refund as quickly as possible through either a BACS refund 9I have provided bank details in another section) or my second choice, to have it deducted from employment earnings in the coming year through PAYE.

Have I completed this correctly to facilitate this? Any idea how quick a refund will be?


Thanks

deanshepherd

Hmm. You appear to have stated that you have realised losses in 2010/11 that you are bringing back to 2009/10. Is this what you meant to do?

I assume you have actually made losses in 2009/10 that you want to carry back to 2008/09 (or set against other income of the 2009/10?)?

lmiddleham

Hi

The business started trading in tax year 2009/10 and made a loss of £586.

I now either want that refunded into the bank as a first choice.

From the options you mention I would want to set this off against tax paid through employment (via PAYE) in 2009/10

qwerty

Because this is the first year of trading, the loss can be carried back three years if this would be more beneficial. This would be particularly useful if the client was a higher rate tax payer before giving up employment and becoming self employed.

Have you looked at all the options to see which will produce the highest tax repayment?

If offset when basic rate taxpayer, £586 X 20% = £117.20
If higher rate, £586 X 40% = £234.40

If it is a current year claim you want, enter the loss into the box "Losses from this tax year set off against other income for 2009-10"

Also, remember, if you offset the loss against non-trading income for income tax relief, the loss is still carried forward for offset against profits for future Class 4 NIC purposes.

As for how long it takes for repayment - that all depends on HMRC. I filed my Tax Return a couple of weeks ago, and due to increased professional subscriptions was due a repayment which appeared in my bank account within about 3 days!

lmiddleham

I can't see a box for "Losses from this tax year. . ."

Which bos ix this on the part of the form I've copied in my first post?

I've currently got the loss on line 3, and am claiming it against employment income in 09/10 (box 4)

Thanks

qwerty

On Self Employment (short) - box 32
On Self Employment (full) - box 77

Hope that helps

lmiddleham

I had it in those boxes but it also wanted me to put a figure in one of these boxes:

Income Tax losses
1. Earlier years' losses - which can be set against certain other income in 2009-10: £ Not Entered
2. Total unused losses carried forward: £ Not Entered
3. Relief now for 2010-11 trading, or certain capital, losses: £ 586.00
4. Tax year for which you are claiming relief in box 3, for example 2007-08 YYYY YY: 2009-10


Turned out they appeared because I said Yes to do I have any income tax losses.

I've no idea what the difference between income tax losses and the loss from trading is?!

What I do know is that the figures I wanted are in the places you said and the return now makes sense so thanks for your help.

deanshepherd

Income tax loss and trading loss are the same thing. It wants you to put the year in item number 4 of your list.

lmiddleham

If I put the year it insists on me completing another box too.

I was able to put the year elsewhere on the form.

Thanks