Client had loss in 13/14 of 7K, profit in 14/15 of 6K so had losses b/f of 1K.
Obviously no thought of class 4! Would the 6K in 14/15 be "covered" by LEL or whatever the 8,060 is or is it using up the 6K of class 4 loss b/f. I think it is.
IN 15/16 client has 11K (suspiciously?). Is class 4 due on 11K less 1K less 15/16 LEL = 2K . I think so.
THank you
Replies (12)
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Class 4 losses are a separate claim. You don't have to use them in the same way as Income Tax losses.
Based on carry forward, Class 4 assessments are
13/14 nil
14/15 nil
15/16 £10000
Total agrees with your overall profit of £10000 for the three years.
Thanks. So I make a separate adjustment on the self employ page for the extra 2K to bring the total "profit for class 4" to 8K? Seems a bit of a scam to me that I can do that, and preserve the LEL.
What adjustment ? There is no £2k. Fogged.
Check your arithmetic.
Because £6ooo less £6000 loss is nil. Leaving £1000 loss to deduct from the £11000 in the following year.
You don't have to use the same loss relief as income tax but pretty much the same rules apply as regards how the loss is relieved.
A common scenario is carrying back income tax losses in the first year of the trade but carrying forward Class 4 losses because there are no Class 4 profits in the past against which the losses could be relieved.