Complicated Tax Return / Student Loan / Offsetting Losses Help!

lvm

So, this may be a query needed for an accountant / tax advisor but thought I might as well ask here on the off chance someone has come across this before.

2012/13 tax return:

Employed income of around £20k, tax of £2228 paid.
Self employed business loss of £17k
Furnished Holiday Letting loss of £5.5k

Following submission of tax return, I received full tax refund of £2228.

2013/14 tax return (in progress!):

Employed income (1) of just below £20k, tax of £1800 paid
Employed income (2) of £7.5k, £1.5k tax paid
Employed income (3) of £5416.66, £1083.33 tax paid
Self employed business profit of £10k (for example!)
Furnished Holiday Letting profit of £5k

Question 1

I was under the impression I could bring forward the 12/13 self employed loss of £17k and offset against 13/14 profit. The £7k net loss could then be offset against my PAYE income and I'd get a tax refund. Self Assessment is only letting me enter a maximum of the 13/14 profit. Have I completely got the wrong end of the stick here or is there something I'm missing? Could I have possibly not entered something correctly last year which is why it's causing an issue now?

Question 2

I pay student loan repayments on employed income (1) only as this is the only job I received more than the threshold in. When completing tax return, it's adding up all employed income and assuming I should have paid student loan on everything above the threshold - not just for the one job which is what would happen if I didn't have to complete a tax return. Any way around this or am I expected to pay this?

Thanks in advance for any wisdom offered!

jimmo

Question1
As a general principle trading losses (and FHL losses)can be set against other income for the year of the loss or the previous year.
If they are carried forward they can only be used to set against future profits from the same business.
http://www.hmrc.gov.uk/manuals/bimmanual/BIM85010.htm
So, I am afraid you are wrong to try to set previous years losses against other income.
However I can’t see how you achieved repayment of all of your PAYE tax for 2012/13 without setting your trading losses for that year against your PAYE income. If you did that you would have no trading losses to bring forward to 2013/14 in the first place.
Question 2
I am definitely no expert on Student Loans but my understanding is that your repayments are based on total earned income and, if you’re within Self Assessment the system catches up with you.

chrismac1

Note that from 6 April 2012 losses on FHLs can only be carried forward indefinitely against future profits from FHLs. Also note that some parts of the HMRC website have not been properly updated to reflect this change.

anselld

Offset 10k of the 17k, carry forward 7k loss.
Offset the 5k FHL, carry forward 0.5k loss.
Pay student loan on all remaining earned income.

purdyoaten

anselld wrote: »

Offset 10k of the 17k, carry forward 7k loss.
Offset the 5k FHL, carry forward 0.5k loss.
Pay student loan on all remaining earned income.

Sorry - this simply cannot be done and is a common and costly mistake. You cannot simply choose how much of the loss that you can set against an income for the same year.

The option on the trading loss is to claim 17K or nothing as his PAYE income is equal to or more than this. While this may 'waste' his personal allowances, that is tough.

As jimmo states above:


However I can’t see how you achieved repayment of all of your PAYE tax for 2012/13 without setting your trading losses for that year against your PAYE income. If you did that you would have no trading losses to bring forward to 2013/14 in the first place.

Now, if his PAYE income was only £10k, the option to set £10K of the £17K loss, again with the loss of personal allowances, is there. Then, one can carry the unused losses of £10K forward against the same trade.

anselld

purdyoaten wrote: »

Sorry - this simply cannot be done and is a common and costly mistake. You cannot simply choose how much of the loss that you can set against an income for the same year.

Dont understand why not.

The OP elected to offset nothing in 2012/13, presumably to utilise their personal allowance.

Hence the 17k self employed loss is only now available to offset profit in the same business as jimmo stated. There is only £10k profit in the same business.

Are you saying you *must* offset loss against PAYE in the same year if it is available?

purdyoaten

anselld wrote: »

Dont understand why not.

The OP elected to offset nothing in 2012/13, presumably to utilise their personal allowance.

Hence the 17k self employed loss in only now available to offset profit in the same business as jimmo stated. There is only £10k profit in the same business.

Are you saying you *must* offset loss against PAYE in the same year if it is available?

Ah - I have misunderstood your previous comment. I was referring entirely to the set off of losses in the same year - not carried forward. I was presuming that you were offering an alternative to what the op says that he did in his first post - claimed the loss of 17K against his PAYE income of the same year which, as jimmo says, he must have done if he claimed all PAYE tax back.

My apologies!

anselld

purdyoaten wrote: »

Ah - I have misunderstood your previous comment. I was referring entirely to the set off of losses in the same year - not carried forward. I was presuming that you were offering an alternative to what the op says that he did in his first post - claimed the loss of 17K against his PAYE income of the same year which, as jimmo says, he must have done if he claimed all PAYE tax back.

My apologies!

Sorry, no it is my fault, I had missed the bit where OP has already had 12/13 full refund so yes I understand your point now.

lvm

Thank you all for your input.


Think I' have c*cked up possibly not utilised my personal allowance in the best possible way for 12/13 however will have a good read through all you've said tomorrow so I can completely understand it.


Thanks again!