Carry back losses 3 years

SHARPYWAN

Hi,
I started my business in Jan 2012 and i'm completing my 1st tax return for 2011/12
I am showing a loss of approx £25k (used a large AIA) i am wanting to carry this loss back to 2008/09 (is this still allowed?)
to when i was an employee and paying tax through PAYE.
I've calculated it so that i make my income for 2008/09 equal to my personal allowance for that year,
so in effect i should get a refund for the full amount of tax i paid in that year.

Problem is how and where to show it in online self assesment??

In section Income tax losses there are 4 boxes
1) Earlier years losses
2) Total unused losses carried forward
3) Relief now for 2012-13 trading
4) tax year for which you are claiming relief in box 3

So there doesn't appear to be a box for carrying back the loss.
If i enter 2008-09 in box 4 it then says i have to have a value in box 3??

Confused, any help greatly appreciated

Many thanks
Richard

pjclar02

Hello there

You can no longer carry back a loss for three years. You can carry the loss back against your 2010/11 income, you can utilise the loss against other income in 2011/12 or you can carry it forward to offset against future profits from the same trade.

Hope this helps

SHARPYWAN

Also read :Losses in the first 4 years of trade can be carried back against other income of the 3 previous years. so where can i get a definitive answer??

thanks

anselld

SHARPYWAN wrote: »

Also read :Losses in the first 4 years of trade can be carried back against other income of the 3 previous years. so where can i get a definitive answer??

thanks

http://www.hmrc.gov.uk/helpsheets/hs227.pdf

"If your trade was set up and commenced trading on or after 6 April 2008, you can claim early trade losses relief calculated by reference to your income (but not capital gains) of the three years 2008–09 to 2010–11. The loss is first relieved by reference to your 2008–09 income. If there is any balance of loss left, this is relieved by reference to your 2009–10 income. Finally, any remainder is relieved by reference to your 2010–11 income."

Tinker009

Hi, I have a couple of points:

You have to use the loss against the income for 2008/09 first. You must use the losses to cover ALL of your income, i.e. you cannot restrict the losses to leave an amount equal to your personal allowance in charge. Any excess of losses is carried forward to 2009/10 and then 2010/11. So, if you had gross income of £20k in 2008/09 then you will have £5k of losses to use against income in 2009/10.

Once you calculate what the repayment of tax owing to you is, you enter this in Box 14 of the Tax Calculation Summary pages (decrease in tax due because of adjustments to an earlier year). I use third party software but hopefully this box is easy to find on the online system.

You do not have to complete the income tax losses section.

Also, remember to include your bank account details on the tax return so you can get a quick repayment J

SHARPYWAN

Thanks everyone for help and advice, really useful.
I've been on phone this morning to HMRC who were great.

Just for your info, i have restricted my AIA claim to give me just the right amount of losses in 2011-12 so that when i put it against income of 2008/09 it bring s my income down that year to £5,950 which is my personal allowance, therefore allowing me to get back every penny of tax paid in 2008/09. obviously this means i now have a bigger pool for WDA as used less in AIA.

Thanks everyone :-)
ps aparently any tax due back is in my bank account the next working day, happy days!!

Tinker009

Great, glad you got sorted and of course, good point about restricting the AIA so you don't waste your personal allowance. And praise for HMRC - not often we hear that!!