Client has 3 self-employments - total profits below personal allowance but slightly in excess of Class 4 NIC threshold.
I have done s64 claims in the past with a separate loss memoradum for IT and NIC purposes but the pupose has always been income tax offset against non Class 4 NIC income.
In the above sceanrio is it possible to offset the class 4 NIC loss but carry forward the IT loss. Or would the IT loss need to be offset against total income to be able to utilise the class 4 NIC loss?
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You have to offset the b/fwd losses against the 'first available future profits from the same trade' - the two key phases being 'first available' (even if that means wasting the personal allowance) and 'same trade'.
According to HMRC you have to set it off against the other trades for Class 4 purposes, I think, but I don't believe the legislation actually bears that out.
According to HMRC you have to set it off against the other trades for Class 4 purposes, I think, but I don't believe the legislation actually bears that out.
Well, there's no point using losses against income with no Class 4 liability.
You can use the losses in the same way as you can for income tax. But you don't have to mirror the claims. You can claim income tax relief one way and Class 4 relief in another. If claiming the losses sideways for Class 4 is good for your client, you're free to do so, however you've claimed your income tax loss.
Have you read SSCBA 1992, Sch 2, para 3 to see if its actual words agree with HMRC's interpretation of them. I'm not sure it does, but then HMRC are responsible for how all the tax software gets coded.