Self-Employment, outgoings & losses - my dumb questions

lafaux

Hello

I'm just looking at my self-assessment form 10/11 and have some potentially really stupid questions - if anyone kindly feels like humouring me with an answer?

If my self-employed income was £1o,ooo, my start-up costs (and outgoings) were around £9,ooo and I originally invested around £7,ooo before I did one days trade - apart from "get a new job" does anyone have any advice how best to approach this with HRMC?

If my own income was £10,000 for the tax year (which doesn't seem too outrageous), is there anyway I can then account for the £7,000 that my business can't repay to me or is the long and short of it that I earned £1,ooo last year? In which case, oh dear!

Someone suggested to me that I can claim losses if I have paid tax previously (I have but not for this stretch of self-employment - it was when I worked previously as a engineer), but I don't see any plausible way of doing this.

I realise I'm going to need to go to an accountant about a few things anyway, however if anyone can clarify this for me first I would really appreciate it plus it might save me some extra billed time with the accountant.

Hope this makes some sort of sense?! Thanks

pjclar02

Hello there

Can you let us know what the £7,000 originally invested was spent on?

If you do include the £7,000 and create a loss of £6,000 therefore, then you can elect to carry the loss back to 2009/10 to offset against your income for that tax year. If you paid tax in 09/10 then you will potentially be able to claim a refund.

Hope this helps.

lafaux

Thanks pjclar02 for your quick reply - I appreciate the response

The £7,ooo was for equipment mostly but also a little on premises, licences, insurance etc - seems daft now when I see all the numbers like this, but without this stuff I wouldn't be able to do my job.

My 09/10 was a big tax year for me but as it was in an entirely different employment type so I'm not sure if this confuses matters further - it all confuses me!

I think I'll phone the Tax Office tomorrow and hope I get a very patient person on the other end of the line and then it's over to the accountant.
I'm just glad I started dealing with this now rather mid-january or I'd be having a panic.

Thanks for your time

pjclar02

No worries.

Losses realised in 2010/11 can be carried back against 2009/10 total income - so there will be no issue with this being a different employment.

Your accountant will give you the precise figures, but as you have a loss of £6,000 that can be carried back to 09/10, if your were a higher rate taxpayer in 09/10 (and it sounds like you may have been) you should be due a refund of around £2,400.

Good luck.

Pennywise

So, just to confirm, your total costs were £16,000? If so, then yes, you have a loss of £6k that can be set against prior year or current year employment income to claim a tax refund.

Zorz_2

Hi,

I suggest first to attend some of HMRC's free workshops:
http://www.hmrc.gov.uk/bst/

westy22

If so, then yes, you have a loss of £6k that can be set against prior year or current year employment income to claim a tax refund.

Are you saying that a loss from self-employment in 2010/11 can be carried back and then offset against other total income in 2009/10 i.e. employment income under PAYE / dividend income / savings income etc?

Nazitf

pjclar02 wrote: »

Hello there

If you do include the £7,000 and create a loss of £6,000 therefore, then you can elect to carry the loss back to 2009/10 to offset against your income for that tax year.

Hope this helps.

Is the refund for the offset deducted from the 2010/11 payment or will it be done as a separate transaction?