Help regarding losses please

Sarah-Lou

Really should know this but can't get my head around it /

Friend made a loss on her business last year of £3109. She had a capital gain last year.

Taxable profit this year is roughly £2500 so no point setting off loss against this. She had a capital gain this year also.

What can she set her £3109 loss against? She is a sole trader.

I am going to attempt to find out the answer myself (now where is my textbook??) but if anyone can help I'd be incredibly grateful. Thank you

Sarah-Lou

Sarah-Lou

hmm having read i think she could have set the trading loss against her capital gains last year? now i am presuming it is too late now?

This will teach her to do it herself lol

Newbie

Generally speaking Sch D losses can go against general income in the current or previous year, see below for full details
http://www.hmrc.gov.uk/agents/toolkits/income-tax-losses.pdf

Sarah-Lou

How the trade loss can be utilised
Normal time limit
Loss relief provision
Set off against general income and chargeable gains of the same tax year or previous tax year - see Q3.
Within 12 months from 31 January after the end of the tax year in which the loss occurs

going by the above the trade loss that she occurred last year could be set against capital gains of that year and as it is within 12 months from the 31 january after the end of the tax year in which the loss occurred? am i missing something?

Obviously the tax return is fully submitted for that year but she didn't realise she could set it against capital gains?

Sarah-Lou

Presumably she can amend her tax return from that year as the 12 month limit isn't up till Jan 13?

Monsoon

Yes you can amend a 2010-11 return still.

I didn't think you could offset losses against capital gains. I've just run the scenario through my tax software and no, you can't. So nothing to amend.

Note: chargeable gains are different from capital gains.

If it was year 1 of trading, then you can carry the loss back against the last 3 years income, most recent year first.

Or you can carry forward to profits of the same trade in the future - as you've highlighted, no point doing it for this year.

stevo5678

Monsoon wrote: »

Yes you can amend a 2010-11 return still.

I didn't think you could offset losses against capital gains. I've just run the scenario through my tax software and no, you can't. So nothing to amend.

Note: chargeable gains are different from capital gains.

If it was year 1 of trading, then you can carry the loss back against the last 3 years income, most recent year first.

Or you can carry forward to profits of the same trade in the future - as you've highlighted, no point doing it for this year.

I also thought that a trading loss once c/f can only be relieved against future trading profits.

Does she not have enough taxable income to use against the £2500 in the year w/o wasting the PA?

Monsoon

stevo5678 wrote: »

I also thought that a trading loss once c/f can only be relieved against future trading profits.

Agreed, once c/f.