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CA for first year of trading, losses and carryback/fwd

CA for first year of trading, losses and...

As a Sole trader (who is also employed under PAYE and in need of an accountant!), built up contacts, bought equipment and set up websites before trading in 2011/2012.

SE Business is a mixture of consultancy, training and multi-media work including photography, video, designing websites and publishing in technical and national journals.

Under self employment clients paid £1500 in 2011/2012.

Expenses such as utilities, mileage allowance only for business miles (not commuting to employee workplace) understood.

Given the large investment made in audio/photographic equipment, software, and relatively small income return, what can be taken as AIA/FYA - a significant amount of  equipment was bought before April 2011 and some in that tax year.  The latter amounted to approximately £3000 whilst the former (including office furniture) is around £12500.

Can any other start up costs like website hosting fees, advertising costs from previous years be included?

Once the loss is calculated what is better -

1. claim £1500 for 2011/2012 and carry fwd the remainder at WDA 18%

2.claim all losses for that TY - doesn't this affect PA?

3. claim £1500 for TY and remainder offset against PAYE income of previous year?

Many Thanks

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By mhtax
30th Jan 2013 20:37

Also consider

losses in early years of trade can be carried back 4 years against PAYE.

Unless last year would achieve 40% tax relief and earler years wouldn't I would always go as far back as possible to leave maximum flexibility for the future

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By ecojet
30th Jan 2013 21:07

Many thanks mhtax

Earlier years below 40% threshold.

If total losses incl. AIA/CA and 2011/12 expenses amount to say £20k how to spread them over the previous years?

Something like?

2011/12: £1500

2010/11: £1500

2009/10: £7,000

2008/09: £10,000

 

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By mhtax
31st Jan 2013 09:05

No choice

oldest year first, and it uses the amount of loss even if that wastes personal allowances

e.g. total income year 1 12k uses 12k of the loss and the next 8 rolls forward to year 2

Only way to limit amount going back to year one is to only claim enough AIA and wda to reach the taxable amount relieveable

i.ee.

income 12k allowances 5k make loss total 7k and carry rest of pool forward.

Then, if loss in second year of trade repeat the exercise 

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By ecojet
31st Jan 2013 09:28

Thanks mhtax,

makes more sense to me now.

So if PAYE (gross): 2008-9: £ 27,000 - £20k means basic tax on 7k but no PA on that amount

So tax @20% = £1400 c.f. PAYE tax paid around £4700 that year?

 

 

 

 

 

 

 

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By mhtax
31st Jan 2013 21:29

Loss first

paye gross 27000

loss 20k leaves 7k , then personal allowance so tax on small amount not repayable

If paye had been 22000, loss 20 k leaves 2k taxable but covered by allowances so some allowances wasted.

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