I have a client who traded as a plumber he was a sole trader and made losses in the first year.
He now trades as a partnership with his wife and has made a profit. It's the same trade just different structure.
Is it possible to bring forward the losses made as a sole trader to offset against his share of the partnership profit.
Cheers!
Replies (3)
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It's a continuation for tax purposes
Going from a sole trade to a partnership (or, indeed, vice versa) is treated as a continuation for tax purposes so losses can be c/f against his share of the partnership profits.
Don't overlook carry back option
Tax losses in early years of a trade can also be carried back three years for offset against other income (such as employment income).
This is an option worth exploring with a view to preserving future personal allowances and boosting cashflow tax-wise now rather than in the future.