can he claim some tax back

alwaysskintsarah

hi every 1 hope u had a lovely christmas
just asking for any advice
i have been doing my dads book work for years but this year and last year i been doing his self assesment on line 4 him this year he is at a loss n i was woundering if he can claim some tax back he been trading 4 28 years this is the very first loss the business has taken could he get some tax back ?
self employed dont know what tax code he under ?
any help welcome thanks x

Quenastoise

Has he got any other income he could set off the losses of the year against ?

If not, he could set off the losses against future trading profits

Tax codes don't apply to the self-employed, however, your dad is entitled to his personal allowance

alwaysskintsarah

hi no he has no other income also last year he went br

alwaysskintsarah

is there any thing he could apply 4 as they are findingit hard?

alwaysskintsarah

what is personal allowance

TM1976

He can carry a loss back 1 year or carry it forward against future years. He can also carry back 3 years if he ceases to trade, but this may not be relevant.


See the table below:



The table below provides a summary of the trading loss relief that a sole trader is entitled to claim:
a) Type of relief b) Time when loss occurred c) Income/profits against which loss will be set d)Relevant tax year

1: a) Carry-backward relief b) Any accounting year of trading c) Any income and chargeable gains d) The twelve months prior to the loss
2: a) Carry-forward relief b) Any accounting year of trading c) Subsequent profits of the same trade d) Any subsequent years until loss is absorbed
3: a)Carry back of trading loss b) Final twelve months of trading c) Any income and chargeable gains d) The three years before the business ceased trading

Chinkle

Without being disrespectful Sarah - why are you doing your dad's books/self assessment when you seem to know so little about the UK tax system yourself?

Having said that, as long as you have provided HMRC with the correct trading figures (income and expenditure) then it is highly unlikely that he is owed anything by HMRC. All the hoo-haa at the moment regarding underpaid/overpaid tax relates to the PAYE system that your dad isn't part of being self-employed.

HMRC would have looked at his profit after expenses, taken into account personal allowance and then requested tax payments on anything over this.

TM1976

alwaysskintsarah wrote: »

what is personal allowance

It's the amount he can earn before he has to start paying tax. For 10/11 it's £6,475.

chrismac1

If he really has made a loss for the first time, it's probable he is due back tax paid on 31 Jan 2010 and 31 July 2011 under payments on account. There is also a temporary recesssion concession for him to carry the loss back further than one year. However, this whole area of loss carry back is not in my view a good one for the DIY accountant unless the loss is small - say under £3,000.

The reason is that it might be sensible for him to:

1. Forgo some or all of his claimable capital allowances.
2. Not carry the loss back at all but carry forward.

All depends on his full tax circumstances. I have clients who've had losses this tax year and elected to carry forward as trading is strong. I've had others who've had taxable income from employment as well as self-employement, so using the trading loss to recover tax paid under PAYE was the way to go. And one other who is considering a one-year carry back, we'll make the decision in the next few days as his trading has picked up this last quarter so it might be better to carry forward.

harryhound

alwaysskintsarah wrote: »

hi no he has no other income also last year he went br

Does this mean he declared himself bankrupt (I'm not very good at text speak).

If he suffered this "living death" then I would have expected his trustee in bankruptcy to handle all his financial affairs until such time as he was discharged?

no-oneknowsme

alwaysskintsarah wrote: »

what is personal allowance

:rotfl:you are doing your dads book keeping and self assessment and you seriously have to ask this question?