Offsetting loss against other income

LaurenS

A sole trader client uses cash basis accounting and has made a loss in the first year. Client is also employed and is a higher rate tax payer. Can the loss be taken into account against the income from employment or should the loss be carried forward against potential future profits?

burg

AS the cash basis has been used then sideways relief is not available. Losses can only be carried forward for reief against profits from the same trade. A check should be made to see if preparing the accounts on an accruals basis may be better for the client as then sideways relief would be available.

stevo5678

If the stock is not that much nor the debtors/prepayments etc then as Burg says using an accruals basis may make sense to use the loss.