I currently work in industry so my personal tax is not 100% but a friend of mine asked for some advice and I was intrigued by her situation. She has a family so does not have a job, but she does do some occasional work as a sole trader and consequently does a self assessment. She operated a trade where she acted as an agent for a childrens toy company (similar to the old days of Avon parties, tupperware parties etc). The top level company went into liquidation meaning that her trade had to cease. This left her with trade losses of about £4k. This loss was for 2016/17 and was carried forward to 2017/18. She is now doing her 2017/18 SA return and wants to know what to do with the loss that is being carried.
I have a couple of questions that I hope you can help with...
Obviously a loss can be carried forward, but can it be used against future trading profits if the future trade is different, or does it have to be used against the same trade?
Although my friend is now trading again and making a small profit this is not going to be taxable as she will have her personal allowance, and it will be some time before she will ever need to pay tax, therefore there is little use for the loss at present.
The trade that she was doing never made a profit so the loss cannot be carried back/early years relief. She did work before having children and paid PAYE tax 4 years ago, does she still have the option to use the trading loss to offset her PAYE?
Sorry for the multiple questions but it would be interesting to hear what people think.