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Self-employment losses

New losses on top of old carried forward losses.

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I am self-employed and do my own self assessment each year. I have carried forward losses fom last year of £370, but this year I took on business premises & new equipment to expand the business so I have new losses this year of approx £12k. (£17k expenses & £5k turnover). I use cash accounting.

What do I do with the losses from last year? I cannot see anywhere on the SA form to include them.

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RLI
By lionofludesch
20th Aug 2019 17:24

Box 29 on the self employment pages.

However, you're making two errors.

1. You're using cash accounting while you're making a loss and buying new equipment. That's presumably because you don't understand proper accruals accounting.

2. You don't have an accountant.

Stop throwing money at the taxman.

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Replying to lionofludesch:
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By JoF
20th Aug 2019 17:28

She is also listed on her profile as a 'Director' so could be other things needed on that SA (although I reckon that could just be a misunderstanding of what a Director is perhaps)

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Replying to JoF:
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By lionofludesch
20th Aug 2019 17:33

Well, if this is a company, even more reason to get an accountant.

Just saying, like.

Good job this is Wembley week.

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Replying to lionofludesch:
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By JoF
20th Aug 2019 17:39

Absolutely totally agree, like.

My lot arent at Wembley for a while, being a fan of the round ball league, although I have been known to attend some of the games you frequent.

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By Accountant A
20th Aug 2019 17:33

So, as "Studio Director/Gyrotonic Instructor The Art of Movement", which professional accountancy body are you a member of?

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Replying to Accountant A:
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By lionofludesch
20th Aug 2019 17:36

Come, come. This is Wembley week and a time for goodwill.

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RLI
By lionofludesch
20th Aug 2019 17:35

Just in case the evidence evaporates.....

I am self-employed and do my own self assessment each year. I have carried forward losses fom last year of £370, but this year I took on business premises & new equipment to expand the business so I have new losses this year of approx £12k. (£17k expenses & £5k turnover). I use cash accounting.

What do I do with the losses from last year? I cannot see anywhere on the SA form to include them.

Thanks (2)
By Tim Vane
20th Aug 2019 17:52

I assume when you say cash accounting, you actually mean cash basis? The two are not necessarily the same. I suspect that is merely the tip of the misunderstanding iceberg and that most of the errors are hiding below the surface where they will sink you eventually.

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By Dorcas Walters
20th Aug 2019 18:09

I run an exercise studio - at present with me the only instructor (hence studio director) so I am a self employed sole trader.
I spoke to an accountant recently because i thought I might need one and he suggested I carry on doing to my own return for the moment since my accounts are fairly simple and I am not earning much yet. He also said carry on using cash basis & claim my small equipment costs as simple expenses.
I am not throwing any money at the tax man because I have not yet made any profit - as is often the case with young businesses.
Obviously I am not likely to get the advice I need here though so I shall look elsewhere.

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By Accountant A
20th Aug 2019 18:12

Duplicate

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By Accountant A
20th Aug 2019 18:09

Whatever it is, it looks like a lot of fun:

https://www.theartofmovement.co.uk/

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Replying to Dorcas Walters:
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By lionofludesch
20th Aug 2019 18:14

Dorcas Walters wrote:

Obviously I am not likely to get the advice I need here though so I shall look elsewhere.

Really ? I answered your question in the first line of the first reply.

If that's all you need to know, carry on.

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Replying to lionofludesch:
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By Dorcas Walters
20th Aug 2019 18:42

Yes, thank you that was the only line of any help but unfortunately there are no box numbers on the online form, but i shall keep searching before I submit.

I don't believe I'm making a mistake using cash accounting as I would prefer to count money in and out when it actually happens. The accountant I spoke to agreed with what I was doing & did not think I necessarily needed an accountant - which I thought was refreshing.

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Replying to Dorcas Walters:
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By JoF
20th Aug 2019 18:46

So a highly qualified and respected Accountant tells you that you are wrong, but you think you are correct.

You dont know what you dont know.

Just shove it in any old box, it will be fine.

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Replying to Dorcas Walters:
RLI
By lionofludesch
20th Aug 2019 19:27

Dorcas Walters wrote:

Yes, thank you that was the only line of any help but unfortunately there are no box numbers on the online form, but i shall keep searching before I submit.

I don't believe I'm making a mistake using cash accounting as I would prefer to count money in and out when it actually happens. The accountant I spoke to agreed with what I was doing & did not think I necessarily needed an accountant - which I thought was refreshing.

He probably thinks you'll have trouble paying him.

The risks you take are these.

If you have no other income, you could be wasting your personal allowances.

If you do have other income, you lose the opportunity to use the losses against that income and create a refund.

One day, one would hope, your business will make a profit and it is then that you will be paying too much tax.

Turning to the form itself, what software are you using ?

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Replying to Dorcas Walters:
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By lionofludesch
21st Aug 2019 08:34

duplicated

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Replying to lionofludesch:
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By Dorcas Walters
20th Aug 2019 22:35

I'm not using any accounting software. I fill in the SA form online rather than paper.

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Replying to Dorcas Walters:
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By jcace
20th Aug 2019 23:44

Work your way through the self-employment screens and on the page with the subtitle "Losses for Dorcas Walters", the third box down should read "Total loss to carry forward after all other set-offs including unused losses brought forward".

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Replying to Dorcas Walters:
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By lionofludesch
21st Aug 2019 08:10

Dorcas Walters wrote:

I'm not using any accounting software. I fill in the SA form online rather than paper.

HMRC software, then.

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Replying to Dorcas Walters:
RLI
By lionofludesch
21st Aug 2019 09:11

Dorcas Walters wrote:

I'm not using any accounting software. I fill in the SA form online rather than paper.

So three pages after the warning "Important. If you answer yes to cash basis, be aware that this will restrict claims to certain expenses, capital allowances and loss relief claims", there's a page headed

"Other tax adjustments for Dorcas Walters"

Second box is "Loss brought forward from earlier years"

Don't know how you missed it........

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Replying to lionofludesch:
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By jcace
21st Aug 2019 12:19

Second box is actually "Loss brought forward from earlier years set-off against 2018-19 profits", which won't be the case for Dorcas, as she has no profits in 2018-19.

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Replying to Dorcas Walters:
By Duggimon
21st Aug 2019 09:13

You have claimed the cost of your equipment as a deduction in a year when you were paying no tax at all.

If the cost of the assets you bought took you from a profit to a loss, you have wasted some of your available allowance.

You price your time at £50 an hour. If you have spent more than four hours researching and doing this return, and if the accounts are as simple as you say, you may well have been better off engaging an accountant anyway and spending your time doing what you do better than any of us in here could do, even if the figures ended up the same. The figures would be different though because whatever way you swing it you're wasting your available allowances.

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Replying to Dorcas Walters:
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By legerman
21st Aug 2019 10:20

. Already answered upthread, pays me to read properly first.

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Replying to lionofludesch:
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By JoF
20th Aug 2019 18:47

© another satisfied.....

will let you finish it Lion as its your ©

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Replying to JoF:
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By lionofludesch
21st Aug 2019 08:14

[chuckle]

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