Sole Trader Loss 18/19 to offset PAYE 17/18

Can you use sole trader loss to offset previous PAYE year tax?

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Hi,

As a sole trader who started trading in the tax year 18/19 (note this is the first year of trade) who went on to make a loss in this year (18/19), can this loss be used to reclaim tax paid in full PAYE employment in the previous year 17/18 even though the trade was not up and running then?

Or can the loss only be used to claim tax relief against future profits of the same trade?

Thank you.

 

Replies (2)

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Scooby
By gainsborough
19th Aug 2019 15:25

Short answer is yes - a prior year claim against income is possible - but I suggest you do some further reading.

You should also review early trade loss relief (for losses incurred in the first four years of trade); allocation of losses to tax years using the opening year rules; and the rules on capping loss relief against non-trade income.

HMRC's helpsheet 227 is a good place to begin.

Thanks (1)
RLI
By lionofludesch
19th Aug 2019 16:25

Yes, you can carry it back - but there are snags, mainly that you can't limit the loss to preserve your personal allowance.

Much will depend on the numbers - including stuff you probably don't know yet, such as the level of future profits.

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