Tax Losses - confused

sweetbutternut

Hi,
Can anyone help please? I'm confused by the losses section of the tax form. I am self-employed.

My net business loss for tax purposes is £1000 (2008 to 2009 tax year)

The Total loss to carry forward after all other set-offs - including unused losses brought forward is £221 (This was on the last 2007 to 2008 tax return)

What I don't get is which box to fill in and what to fill in in each box.

There are two options on this year's form:

1.Loss from this tax year set-off against other income for 2008-09: £
2.Total loss to carry forward after all other set-offs including unused losses brought forward: £

Which box do I fill in? I'm not sure where to put the £221 or where to put the £1000. Do I put the £221 in the second option?

Thanks!

fengirl_2

Where do you want to use the losses? Do you want to carry them forward, in which case it's no 2. Or do you want the losses set off against other income for 08/09 in which case its no. 1.

sweetbutternut

Thanks for you reply fengirl. What is the advantage/disadvantage of carrying the losses forward? And the disadvantage of setting off against 2008/2009 income? I don't really understand the difference.

Also, if I decide on either option 1 or option 2, do I put £221 in the box, £1000, or add the two amounts together to make £1221?

sweetbutternut

Hold on....am I right in saying that it's best to use the losses on an occasion where my tax bill may be very high? So...if for example, this year I don't have to pay any tax, then there is no point using the loss this year?

However I still don't know what figure to put in the box. If I decide on either option 1 or option 2, do I put £221 in the box, £1000, or add the two amounts together to make £1221?

fengirl_2

Yes, if you had no other income in this tax year, the there is nothing to set the loss against, so you need to carry it forward. Your cumulative loss will be £1221.

sweetbutternut

Thank you!:)