PAYE and Self Employed

kate1410

Looking for some advice on making the best use of losses please .I earn £14990 on my PAYE, and I started a business in September 2014, which is currently running at a loss. When I fill in my tax return for April 2014-2015 what is the best way to utilise the losses. I have already received my PAYE p60 for tax year 2014-2015 . This p60 shows my income earned as £19056 as my PAYE income decreased from February 2015 . Thanks in advance !

densol_2

How much is the loss and how much did you earn the previous tax year ?

kate1410

Thanks Densol,
The loss is approximately 5500.In the tax year 2013-2014 I earned £22,090 in my PAYE job I also receive child tax credits .

densol_2

kate1410 wrote: »

Thanks Densol,
The loss is approximately 5500.In the tax year 2013-2014 I earned £22,090 in my PAYE job I also receive child tax credits .

As you get child tax credits - its most economical to use the loss against the year its earned as it will also reduce the income for tax credit Calculations. As long as its a genuine trading loss for a commercially run business you choose the option to set the loss off against 2014/2015 income - that will generate a tax refund. The loss is also applied against the 2014-2015 income for tax credit purposes when you complete your renewal. But make sure you complete your self assessment promtly so the numbers all match up.

kate1410

Thanks so much Densol

Pennywise

Although you're using up your loss for income tax relief as per above, don't forget that you havn't yet had any NIC relief. You need to remember to carry forward the loss against future profits of the same business for NIC purposes. Far too many people either forget or don't know they can do this!

densol_2

Pennywise wrote: »

Although you're using up your loss for income tax relief as per above, don't forget that you havn't yet had any NIC relief. You need to remember to carry forward the loss against future profits of the same business for NIC purposes. Far too many people either forget or don't know they can do this!

I must remember to do this next year ! cheers

kate1410

I have just been to my accountant - the loss is actually 3728 .He is certain that its best to carry the loss forward rather than put against this years income for tax credit purposes ? Help - Im confused !

Savvy_Sue

You are paying your accountant to advise you. They should know which questions to ask you, and you should ask them to explain until you do understand!

purdyoaten

kate1410 wrote: »

I have just been to my accountant - the loss is actually 3728 .He is certain that its best to carry the loss forward rather than put against this years income for tax credit purposes ? Help - Im confused !

Given your income, that is strange but, maybe, he has more information than given to date - perhaps, for example, he knows that there will be a profit 2015/16?

There can be effective relief on the loss at 61% if set against the current year and that does not include the Class 4 NIC relief as outlined by pennywise.