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Can I claim expenses from self employed income against PAYE?

Can I claim expenses from self employed income...

Hi there,

I have recently registered as self employed and will have minus £700 earnings for 12/13. This is due to no income yet but set up costs. (I am sure that everything I have noted as an expense is allowed)

I am also employed and have paid PAYE all year through my wages.

My question is: When I am filing my self assesment I will quote my earnings and tax already paid... this will create an over payment of £700 (I think, assuming that i have been taxed corretcly throughout the year, although obvoiusly I havent had my P60 just yet)

I have been advised that this means I can claim that amount back... but now someone has told me today that you can't claim expenses off of PAYE earnings..? Who is right?

Many thanks.


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03rd Apr 2012 20:46

Can Offset These Losses

You can elect to offset your self employment losses against your other taxable income (including your employment income) in the year the losses occur or the your taxable income in the previous tax year. You must specify this on your self assessment tax return as, if you don't, the losses would be carried forward and offset against future self employment profits.

If your losses were £700 then you would expect to get a refund of £140 (£700 x 20% rate of income tax).

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04th Apr 2012 09:24

Earliest year first

You mention having having a loss of £700 for the 2012/13 tax year. I assume you mean 2011/12, given that we aren't in the 2012/13 tax year yet?

Losses in the first four years of your new business can be offset against income from the preceding three years, earliest year first. So, if you have made a self employment loss in 2011/12 you should offset that against other income from 2008/9 first.




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09th Apr 2012 13:58

Ah yes, sorry - 11/12 :)

Thanks for the advice.

So it's not (as I orginally thought) as simple as:

Earnings - £700 = £xxx

£xxx - £7470 x 20% = Tax to pay for year

Tax to pay for year - tax already paid = refund?

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09th Apr 2012 14:31

Are they actual losses or expenses incurred in setting up the business? If they are the latter then they don't come into the equation until you actually start 'trading' in your self employment. They are then brought into account as if you had expended them on the first day of 'trading' and the tax relief is given by offsetting those costs against the income generated in the self employment.

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By DMGbus
10th Apr 2012 13:39

Tax Return completion

There are two quite separate and distinct sections of the Tax Return to complete.

Firstly the employment income pages - which will have NO enttries to do with the self employment.

Then, if AND ONLY IF, the trade has actually started in the given tax year, the Self Employment pages to record the business transactions.  If expenses exceed income on this section of the tax return you then complete the appropriate boxes to claim an offset of the losses against the employment income.

HMRC have on their website some useful helpsheets in the "HS---" series,

for example: HS227 = Losses.



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10th Apr 2012 17:16

Thanks - I'm now even more confused... tax really DOES have to be taxing :)

It is costs incured in setting up. It is a childminding business. I am registered with IR from start of Feb and am advertising but won't actually take any money until september.


I was told by an accountant that I could offset the set up costs against tax paid on my PAYE income for 11/12 but it seems it's not that simple.. So confused!


Thnaks for your help - will check out the factsheets. I'm actually quite a clever person - this has really perplexed me though!

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28th Jan 2013 19:29

Silly question but....

... I saw this thread and have a question of my own...

So, my sister has been self-employed for a number of years, however, last year she took an employed job, and there was no self-employed income as she didn't have time.  She did however still incur self-employed expenses such as professional fees, her business telephone line and web domain costs.  She also worked from home 1 day a week... It has always been her intnetion to continue being self-employed (although the employment was a permanent position I believe it was on a contract basis), so keeping these things in place was necessary.  Can she still enter these expenses on her SA tax return, even though her self-employed income is actually NIL for the year and so create a loss that can be offset against her other income?

I know you can obviously offset expenses against self-employed income to create a loss, but what about when the self-employed income is NIL?

I know this is probably really basic stuff, but the text books don't seem to cover real world scenarios, no mention of zero income!

Many thanks!




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05th Jan 2016 15:38

offsetting trading losses against PAYE income

I have a PAYE job

On a personal basis I also trade stocks and shares/indices (aka spread betting) - using IG Index. I have made considerable losses (whilst attempting to make a profit) this current tax year due to market volatility. Will I be able to set such losses against my salary for income tax calculation for the 2015/16 year when I make that submission in due course? thanks

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11th Jan 2016 18:58

Spread Betting

@gileshoward You (or HMRC) will need to determine if the spread betting is a trade or hobby. (Mind you, you already claimed 'personal basis'.) The tax position is that if it is a personal thing, the gains and losses are outside the scope of income tax.

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