Client has made losses from sole trader activity (arts and crafts type small business making greetings cards at home). Losses now add up to £16k after 4 years although the most recent loss (17/18) was only £380.
Other income from pensions in 17/18 totalled £17,000 so if we opt to offset all the losses then we lose about £10k of losses as the total of trading losses must be used all at once.
Is there anything else that could be done? There are no Capital Gains/Losses and now in year 5 of business so cannot carry back. Client unlikely to cease in next few years so terminal loss relief unlikely, but profits not going to appear any time soon with this type of trade., client advises 18/19 so far is similar to 17/18.
Shall we just accept that some loss relief now is better than hanging on and hoping for a good trading year in 19/20 or beyond?
Replies (15)
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Are you sure it's actually a trade and not a hobby? How can you lose £4,000pa (£80pw) making cards?
I’m not sure I agree with your maths. If the loss for 17/18 is £380 why wouldn’t you sideways relieve it? How would you lose £10k of losses when you only have £380?
Are you sure you can offset brought forward losses against current year total income???
https://www.gov.uk/government/publications/losses-hs227-self-assessment-...
You can not off-set b/fwd trading losses against other income. You can only use it against future profits.
Dunno why you are addressing that towards me. Isn't it obvious that I knew that? (Hint read the whole thread).
Know how you feel! I'm 54 and work alone from home and mostly love it but sometimes really miss being able to discuss options with colleagues. Fast changing profession but I've seen some real clangers made by firms with lots of staff so I console myself with knowing I'll do lots of research if I come across something I'm not sure about.
Agree with the caveats above.
Carry forward losses can only be set against profits of the same trade.
Sideways and backwards losses have to be dealt with separately and can (generally) be used against other sources of income.
You still have time to amend 2016/17 if there are losses available there for sideways relief against general income.