Use of trading loss on starting up against PAYE

My software is letting me do this but I want to double check its right

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Client set up as a sole trader in Jan 2024. He was employed up until that date.

His employment income was £26220 in the year.

He has a trading loss of £19938 (mainly capex).

I thought it was all or nothing with the claim and so would have to use all of the loss of £19938 to get a refund of his PAYE paid.

But my software is letting me put £13650 in meaning he keeps his PA and we still have losses to c/fwd to 24/25 of £6288.

Is this correct? 

Thanks in advance.

Replies (10)

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By JB101
09th May 2024 17:26

What software are you using?

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Replying to JB101:
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By chicka
09th May 2024 21:14

Its BTC and usually I don't have to question the calculations but it just seemed strange it would let me put whatever amount of the loss I wanted against the income to keep the PA.

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Johny Fartpants Picture
By johnny fartpants
09th May 2024 17:26

You are correct. The losses should be fully offset. Two questions:

1. What software are you using? and

2. If the loss is mainly capex, can't you restrict the amount of capital allowances claimed to bring you to the correct result without needing to waste any of the personal allowance?

Thanks (6)
Replying to johnny fartpants:
RLI
By lionofludesch
09th May 2024 19:18

johnny fartpants wrote:

You are correct. The losses should be fully offset. Two questions:

1. What software are you using? and

2. If the loss is mainly capex, can't you restrict the amount of capital allowances claimed to bring you to the correct result without needing to waste any of the personal allowance?

Johnny's right. Disclaim some capex. Capex with the highest writing down rate.

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Replying to johnny fartpants:
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By Paul Crowley
09th May 2024 20:24

+1
First thought I had. Keep it simple. But not taught in lots of tax classes or considered in exams.

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Replying to johnny fartpants:
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By chicka
09th May 2024 21:15

Thanks - Its BTC and yes I should have realised I can just restrict the CA claim.

Thanks (1)
Replying to chicka:
JCACE
By jcace
09th May 2024 22:13

And remember that even if the trading loss is relieved against employment income for tax purposes, it is still carried forward against future Class 4 NIC profits.

Thanks (1)
By I'm Chuck Bass
09th May 2024 17:44

Would a s64(2)(b) claim or a s72 claim help?

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By Paul Crowley
09th May 2024 20:25

Software assumes the user is capable of checking the result.

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Replying to Paul Crowley:
Tornado
By Tornado
10th May 2024 13:36

Like checking results from AI :-)

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