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    • clem1971
    • By clem1971 14th Nov 17, 1:11 PM
    • 1Posts
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    clem1971
    Advice following closure of a business
    • #1
    • 14th Nov 17, 1:11 PM
    Advice following closure of a business 14th Nov 17 at 1:11 PM
    After some advice. I purchased an established business in 2006 and due to health reasons have been forced to close it down. I needed to take out a secured loan to clear business debts etc which amounts to £360 per month over the next 22 years (ouch) As I was a sole trader would I be able to offset that secured debt against my income tax that I am now currently paying through PAYE.
Page 1
    • Pennywise
    • By Pennywise 14th Nov 17, 1:31 PM
    • 9,339 Posts
    • 16,968 Thanks
    Pennywise
    • #2
    • 14th Nov 17, 1:31 PM
    • #2
    • 14th Nov 17, 1:31 PM
    After some advice. I purchased an established business in 2006 and due to health reasons have been forced to close it down. I needed to take out a secured loan to clear business debts etc which amounts to £360 per month over the next 22 years (ouch) As I was a sole trader would I be able to offset that secured debt against my income tax that I am now currently paying through PAYE.
    Originally posted by clem1971
    No. You can only carry trading losses against other income of the same year, and if you're not trading anymore, then there's no trading loss. Presumably your business made a whopping loss in its final years if it was raking up huge debts. How did you relieve those trading losses - the usual way is to set against income from other sources, i.e. employment, but that's only for trading losses of the same year. The other way is to carry back the losses to set against earlier years, so if you made profits in earlier years and paid tax, you may have been able to set the losses back, to reclaim some of the tax you paid in the earlier years. Losses and loss relief is complicated, so your accountant (the one who prepared and submitted your loss making accounts) is the person to ask as they'll know the detail/facts. But, no, you can't set future loan repayments against future employment earnings - that's not how it works.
    Last edited by Pennywise; 14-11-2017 at 1:35 PM. Reason: Didn't initially see the loan was to cover debts and first answer was based on it being for the business purchase.
    • agrinnall
    • By agrinnall 14th Nov 17, 2:30 PM
    • 18,544 Posts
    • 14,272 Thanks
    agrinnall
    • #3
    • 14th Nov 17, 2:30 PM
    • #3
    • 14th Nov 17, 2:30 PM
    That's £95,000 you have to pay on the loan, wouldn't bankruptcy have been a better option?
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