Claiming tax refund after making a loss

ThelmaLouise

I closed my business last May and made a loss of £3k in April and May. I am completing my self assessment for 2013/14 and would appreciate a bit of advice. After putting in all the income and exp figures the £3k shows as a loss. If I just enter the loss in 'loss to be carried back to previous year and set against income' and then put 'please offset loss against 2010/2011 (the last time I paid tax) in the Any Other Info box at the end of the Section, will this generate a rebate? Any help gratefully received.

zygurat789

ThelmaLouise wrote: »

I closed my business last May and made a loss of £3k in April and May. I am completing my self assessment for 2013/14 and would appreciate a bit of advice. After putting in all the income and exp figures the £3k shows as a loss. If I just enter the loss in 'loss to be carried back to previous year and set against income' and then put 'please offset loss against 2010/2011 (the last time I paid tax) in the Any Other Info box at the end of the Section, will this generate a rebate? Any help gratefully received.

The way losses are carried back and set off against previous years income is prescribed by law.
The loss may be carried back to the previous year where it is first applied to the taxed income, it is then used to reduce the untaxed income (broadly speaking the income not taxed because of the personal allowance) if there is any loss remaining it may then be carried back to the penultimate year where the same order of setoff is applied.
It would appear that your best bet would be taxed income in 2013/14.

ThelmaLouise

Thanks for the reply- I don't think I will be paying any tax this year, so any ideas what my options are if that is the case please?

purdyoaten

ThelmaLouise wrote: »

Thanks for the reply- I don't think I will be paying any tax this year, so any ideas what my options are if that is the case please?

None that comes to mind, I am afraid. zygurat789 is correct with the order of set-off but, in the case of a terminal loss, the loss can only be set against income of the same trade.

by reference to profits of the same trade for the three tax years prior to that in which the discontinuance occurs.

Even if you had a profit of only £3000 in 2012/13, it is this profit that the loss must first be set against - useless to you.

http://www.hmrc.gov.uk/manuals/bimmanual/bim85055.htm

jimmo

Just one other possibility.
If your business started after 5 April 2009 you can claim relief for losses made in early years of trade.
http://www.hmrc.gov.uk/manuals/bimmanual/BIM85045.htm

ThelmaLouise

Afraid it didn't but thanks everyone for trying to help.