PArtnership losses and tax etc

[Deleted User]

Partnership I'm in made a loss this year. Apparently, I can claim against this?

Tried reading the HMRC stuff but I'm confused. Am I only one?

Do I need to get an accountant????

Gertie_Walker

If you are confused by tax, an accountant would seem like a good idea.

Your share of the loss can be set off against your other income for the same tax year, so you need to know what the loss is to enter it on your SA.

chrismac1

For anything other than the simplest of partnerships, an accountant should save you a bit of tax here.

If you have spent money on equipment, claiming capital allowances is not necessarily the smart thing to do if it "wastes" one of the partner's tax-free allowances. Then there is the question of how to split up the share of the loss in the most tax-efficient manner, if one or both of you has other taxable income in the tax year concerned. If the partnership has been running for some years, it is possible - depending on the size of the loss - that some can be carried back to earlier tax years. if this is the first year of trading you might want to choose 30 April as your accounting year-end and not 31 March / 5 April.

It's not always cut and dried. I have two clients in a similar position, my job is to rule out the no-brainer options and put the sensible ones on the table. Despite having 2 similar options they chose different decisions - one went for the immediate but smaller tax refund, one for the delayed but larger one!

Pennywise

Don't forget the implications of your trading loss on tax credits either. A loss will reduce your income for tax credits, so if you are claiming, you may also get a higher tax credit award as well as a personal tax refund - may have quite an impact in deciding whether to set the loss against current year income, carry it back to prior year or leave it to set against future trading profits. Not only that, but the effect of the loss on class 4 NICs will also have to be considered. Quite a minefield - you can very easily be a lot better off by not taking the easy option with a trading loss!

[Deleted User]

Pennywise wrote: »

Don't forget the implications of your trading loss on tax credits either. A loss will reduce your income for tax credits, so if you are claiming, you may also get a higher tax credit award as well as a personal tax refund - may have quite an impact in deciding whether to set the loss against current year income, carry it back to prior year or leave it to set against future trading profits. Not only that, but the effect of the loss on class 4 NICs will also have to be considered. Quite a minefield - you can very easily be a lot better off by not taking the easy option with a trading loss!

Yeh. I understnad the normal procedure is to take it as personal tax refund.

Loss wont be much - up to £1000. So split that in two and its only £500 each so wont make much difference.

Class 4 NICs - think I've got an exemption from that.

[Deleted User]

Hmmm. Been to see an accountant. £400 + VAT to do out partnership return - We dont even turnover that much some months.

All I want is someone to give it all the once over and make sure I'm doing it right !!!!

What do other people in my situation do? At the moment, it looks like its going to be take a stab at it myself.... Surely the revenue must expect people to do this faced with the cost of an accountant !!!!

no-oneknowsme

[quote=[Deleted User];38903706]Hmmm. Been to see an accountant. £400 + VAT to do out partnership return - We dont even turnover that much some months.

All I want is someone to give it all the once over and make sure I'm doing it right !!!!

What do other people in my situation do? At the moment, it looks like its going to be take a stab at it myself.... Surely the revenue must expect people to do this faced with the cost of an accountant !!!![/QUOTE]

Couldnt agree with you more paul !

I felt the same . I couldnt see the sense in paying an accountant £400+ to do our tax return when i had the jist of it myself and being the first one we have filed , all we wanted was for someone to run their eye over it to ensure i hadnt made any obvious mistakes.

Our profit was tiny so if we had paid an accountant the biggest chunk of profit was gone lol.

In the end i calculated how much tax and class 4 was due (it was easy enough to do) and then inputted all our earnings and expenses onto the online return and at the end the amount we owed was identicle to the amount i had already calculated so i guess (hope) the return was right.

ceeforcat

nooneknowsme - you did file both the partnership return and personal returns didn't you? Just checking - I'm sure that you did.

no-oneknowsme

Ceeforcat.

If the business is a partnership then a a partnership return would be filed

If the business is not a partnership then a partnership return will not be filed.

Your message is quite cryptic (which i am guessing you intended it to be ) so if your trying to say something i always find straight out and saying it always works best , dont you ?

[Deleted User]

Just realised you gotta buy 3rd party software to file a partnership return as well. It gets worse !

ceeforcat

no-oneknowsme wrote: »

Ceeforcat.

If the business is a partnership then a a partnership return would be filed

If the business is not a partnership then a partnership return will not be filed.

Your message is quite cryptic (which i am guessing you intended it to be ) so if your trying to say something i always find straight out and saying it always works best , dont you ?

Nothing cryptic whatsoever - I had assumed that your business was a partnership and just wanted to make sure that, in addition to filing the partnership return, you had included the partnership information on your personal tax returns. Absolutely no other agenda - unless you know me better than I know myself.