'Sideways loss relief' - 2 Trades

'Sideways loss relief' - 2 Trades

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Hi all

Have a client with the following self employment income for 2013-14

Subcontractor Assessable profits  - £20036

Farming Assessable Loss - (£10596) - which is due to a tractor being bought for £10000 and claiming 100% AIA

My understanding is the loss is split into two identical losses for tax & NI purposes. I know he will get relief for tax purposes for the farming loss, but can I use the farming loss to offset against current year class4 NIC or should this be carried forward and used against future farming profits.

Many thanks

Replies (2)

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By Steve Kesby
05th Jun 2014 10:17

Yes

See NIM24610 and NIM24615.

Note that the final paragraph of NIM24615 is actually incorrect, because Kate made a sideways loss relief claim for the whole of the loss in year 1, which doesn't restrict it to the profits of the same trade. No claim was made to carry forward any part of the loss, which would have given rise to such a restriction.

Para 3(4) tells us that any excess that can't be relieved for Class 4 NIC purposes (but which was relieved for Income Tax purposes) in the year, is treated as deductible from the profits of any relevant trade in subsequent years.

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By seandocs
05th Jun 2014 10:24

Many thanks for your prompt reply Steve.

 

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