Losses

Losses

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Hello

A self employed client made profits of £6197 in 2010/11, which was his only income. This was covered by his personal allowance but there was a class 4 NIC payment due

In 2011/2012 he made a small loss of £448, but he also had employment income. For tax purposes I would like to set off the loss in 2011/2012, and for class 4 carry back to 2010/11

Can someone confirm this option is available? I have carried forward a loss for Class 4 Only before, but have never seen the situation, above, before.

Thanks in advance

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By Paula Sparrow
18th Sep 2012 15:57

No

The ability to carry forward losses for Class 4 purposes is not a separate function from the Income Tax loss, it merely recognises that Class 4 is not paid on all the sources of income against which the tax losses set sideways or carried back have been claimed.  The only option is to carry forward the unused loss for NI purposes.

Whilst claiming the loss against 2010/11 would give the repayment of Class 4, you would also have to claim tax relief against the income from self employment to achieve this.  Therefore, it is not worth claiming.

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