Tax credit declared income and carrying losses forward...

meanbean

Does anyone know if you are allowed to use a final self-assessment income figure if it involved adjustment via carrying trading losses forward from previous years, as the tax credit declared income?

e.g. If I made a loss of £1000 in 2012/13 and carried it forward (via self assessment) but did not use this against income for 2013/14 and instead used it against my income for 2014/15 (e.g. earned £25,000 and applied this carried forward loss, thus reducing my income for tax assessment purposes to £24,000, is it permissible to then declare this end figure of £24,000 on a tax credit return for 2014/15?

Sorry for the complexity, the question just struck me after I had filed all my returns and then remembered an unused carried forward loss.

Icequeen99

No, losses are dealt with separately in tax credits. There are different loss rules. So you need to follow those for tax credits. Google form TC825 which explains.

IQ

skater_kat

for tax credits you can only use the loss in the current year (cant carry forward or back as you can with income tax)

meanbean

Thanks both. Wonderful to be able to get answers here so quickly.

amiehall

skater_kat wrote: »

for tax credits you can only use the loss in the current year (cant carry forward or back as you can with income tax)

This is NOT true.

For tax credits you can offset the loss against other income (for you or your partner) in the current year. If you don't have enough other income as a household to offset the whole loss, you can also carry the remainder forward into a later year but if you carry it forward then it can only be offset against your own self employed profit (not any partner income or your own earnings etc.) You must declare that you had a loss at the time to be able to carry it.

Clearly you can't offset the same loss more than once.

Losses relating to property have different rules to this but they're also able to be carried forward. I'm not sure where the idea that you can't carry the losses over has come from...

skater_kat

only if the losses cannot be offset in the current year though right?