Can I offset loss on shares I bought in 2010 but have sold off in 2011?

safeguard

I bought some shares in a Bank in 2009-2010. They are now currently valued at less than 1/5th of their original value when I purchased them.

If I sell them now, can I offset the loss on my tax return for 2009-2010?

Mikeyorks

Only if you have a CGT gain to offset them against?

You can record the losses on the CGT pages otherwise .... in order to use them subsequently.

safeguard

Thanks for your reply. Maybe I should provide more information.

I spent £1000 on shares in 2009/10. The £1000 was part of my untaxed income from my business which is totally unrelated to shares.

My shares are now worth just over £150. I've lost £850 and would like to sell the shares this week but deduct the £850 from my tax return payments on my business for 2009/10 which is due in on Monday 31st.

Would the tax office allow me to do that?

BoGoF

No, you've already been given the answer.

And 'untaxed income from my business' sounds rather dodgy

Mikeyorks

safeguard wrote: »

Would the tax office allow me to do that?

No. The Bank shares would have given rise to CGT gains if profitable .... any losses can only be set against such gains. There is normally no read across to Income Tax.

There are some exceptional circumstances where CGT losses can be set against income. Your Bank shares will certainly not be one of them as they will be freely traded and are not of 'negligible' value. Some detail here :-

http://www.hmrc.gov.uk/cgt/intro/losses.htm#5

(........ you will put yourself in danger of investigation if you're attempting to show the share purchase as a business expense)

safeguard

Thanks for the link which was really useful.

Also, I didn't quite phrase myself properly earlier with the term 'untaxed income'. I guess I meant pre-taxed. Anyway, whatever I meant, the money is declared.

safeguard

What about offsetting money which I gave someone as a loan? They wouldn't give it back in the end and I've not heard from them since. I didn't do a contract but that's another story. It would be good if I can deduct the loss of this loan from my tax payment.

Mikeyorks

Is / was the loan somehow related to the business you run?

safeguard

The money I leant was part of my turnover. I leant it to a friend who promised to pay me back but disappeared.

Mikeyorks

The point I was making was if your business was related to loaning money to people? Obviously not - so the loan is strictly personal and not tax related.

You sound to be in real danger - I gather this is your 1st Return - of drawing HMRC attention to yourself by including items completely unrelated to the running of your business? It's not wise.

safeguard

Well that's why I'm asking these questions. I want to make sure I don't include things I shouldn't.