Made Capital Gains Loss - Can I Offset This Against Business Profits

Joey122

I recently started a business (5 months ago) and expect to make a decent profit this year

In 2008/09 I made a large loss on shares which I had bought - I am told that this can be offset against profits in the Ltd company if I wind the company down.

My questions is: I have only recently started being asked for a self assessment - I did not do a self assessment in 2009/09 because I was an employee and earning a salary. Is this going to affect my ability to offset my profits when I wind the company down??

Elaine_Wilson

First, if you didn't complete a self assessment return for 2008/09 have you in fact made a claim for the capital loss? This could be done by letter and once claimed the loss can be carried forward indefinitely until it is used.

The capital loss can only be set against capital profits so on the face of it cannot be set against the company's profits.

The company will make profits and pay corporation tax at 21% (unless your profits are very large). The usual procedure is to pay out sufficient dividends to bring your income up to the top of the basic rate band. You would have no further liability on that dividend. The excess profits remain in the company and increase the shareholders' funds which is the same as saying the value of the shares increase.

The suggestion seems to be that you should wind up the company and the retained profits effectively become a capital gain on the disposal of your shares in the company. The capital loss brought forward could be used to reduce the gain to the anuual exemption limit (about £10,000 at the moment).

Joey122

Elaine_Wilson wrote: »

First, if you didn't complete a self assessment return for 2008/09 have you in fact made a claim for the capital loss? This could be done by letter and once claimed the loss can be carried forward indefinitely until it is used.

The capital loss can only be set against capital profits so on the face of it cannot be set against the company's profits.

The company will make profits and pay corporation tax at 21% (unless your profits are very large). The usual procedure is to pay out sufficient dividends to bring your income up to the top of the basic rate band. You would have no further liability on that dividend. The excess profits remain in the company and increase the shareholders' funds which is the same as saying the value of the shares increase.

The suggestion seems to be that you should wind up the company and the retained profits effectively become a capital gain on the disposal of your shares in the company. The capital loss brought forward could be used to reduce the gain to the anuual exemption limit (about £10,000 at the moment).

No i have not made a claim for the capital loss - How should that be done?? It was a large loss (£60K) made in March 2009