Offsetting loss against other income

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
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    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.

    MarieNoelleDonna Curling
  • stevo5678
    stevo5678 Registered Posts: 325
    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.
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