annual dec form - question re loss self employed

can_i_ask

Hello,

We have had our annual dec form through, partner went self employed part way through the year and has made a small loss in this financial year, now on the form it asks for income for employed period this is easy and income for self employed period if you made a loss enter zero - now my question is this:

I understand the loss will be offset against his salary (ie if he earnt 15k and made a 3k loss that his INCOME for the year would be £12k) BUT it does not ask the acutal loss just to put a ZERO in if you made a loss, so how will they know his actual income? Do they check against the tax return that our accountant is completing?

I just do not want them to think we had 15k income rather than 12k

Any help would me appreciated.

kerry13238

prob best to call and renew over the phone and expain

Fire_Fox

I *think* what you are calling a loss is not a loss at all it is allowable expenses. £15K is the gross profit and £12K the net profit (income) surely? You only make a loss if you had a £12K gross profit and £15K allowable expenses leaving a £3K net loss.

compoff

Just put down £12k under the employed earnings, there is nowhere to actually record the loss as such, but if any questions are asked you can explain the situation.

can_i_ask

Thanks for your replys - firefox the 15k was employed earnings. But the business has made a loss and accountant seemed certain that for tax credits that this loss is able to be offset off the employed earnings, I just wasn't sure how to show it via the form. (i hope he's right!)

Thanks again

TaxCreditHelp

If your partner had income from employment but was also working as self-employed, if there is a genuine loss from self-employment he can reduce the declared income from employment by the same value as the loss. This would also be the case if he was self-employed for the full year and made a loss, and had no other earnings, then he could offset this loss against the income declared as your earnings.

can_i_ask

Thanks TCH - that makes sense so in summary if teh figures were 15k employed earnings, then the SE loss was 3k - in the employed income box I could put in 12k and in the SE income box put zero?

Thanks again

CIA

TaxCreditHelp

That's right. And in the future if there is such a loss from Self-Employment where both of you would be reporting Nil income in total, then you can carry any loss over to the following year and reduce your income to offset any losses from the previous year.