Claiming SA loss from PAYE tax, is it possible?

CakeCrusader

Hiya.

I've been self employed for the past 10 years, and I started a PAYE job last year. I've just de-registered as self employed as my PAYE job is keeping me really busy, and I've just filled my last tax return. Because I was so busy with my PAYE job last year I ended up running my self employed job at a loss. I filled my tax return, but it's not deducting my loss from my PAYE. I called HMRC to ask, and the first person I spoke to said I can't deduct a self employment loss from my PAYE, the second said I can and this wasn't showing in the calculation, but they said it would all be worked out by HMRC. Is this right?

My PAYE income was 27k. I had work expenses of 1.8k (I work from home so have gas/electricity/travel to the office). My loss from self employment was 2.8k, so is my income £22,400, and should I only pay tax on this?? I keep checking the calculation online and it's telling me I'm due a refund of £6.60p, which doesn't seem right considering I've paid tax on 27k and not my actual income.

I hope this makes sense. Thank you

antrobus

Claiming sole trader losses against PAYE income is possible. But there are conditions. Eg HMRC need to be statisfied that the business is genuine and you need to have spent ten hours a week working on the business.

http://www.smallbusiness.co.uk/financing-a-business/accounts-and-tax/1274636/offsetting-losses-against-paye.thtml

An alternative would be to carry back the losses to the previous tax years if there were profits in those years.

CakeCrusader

Ah, that's really helpful, thank you.

Yup, it was more than 10 hours and I was hoping to earn a profit. My client was a bit crap though and I ended up cancelling the contract in the end (hence the loss).

[Deleted User]

antrobus wrote: »

Claiming sole trader losses against PAYE income is possible. But there are conditions. Eg HMRC need to be statisfied that the business is genuine and you need to have spent ten hours a week working on the business.

http://www.smallbusiness.co.uk/financing-a-business/accounts-and-tax/1274636/offsetting-losses-against-paye.thtml

An alternative would be to carry back the losses to the previous tax years if there were profits in those years.

.......................

[Deleted User]

CakeCrusader wrote: »

Hiya.

I've been self employed for the past 10 years, and I started a PAYE job last year. I've just de-registered as self employed as my PAYE job is keeping me really busy, and I've just filled my last tax return. Because I was so busy with my PAYE job last year I ended up running my self employed job at a loss. I filled my tax return, but it's not deducting my loss from my PAYE. I called HMRC to ask, and the first person I spoke to said I can't deduct a self employment loss from my PAYE, the second said I can and this wasn't showing in the calculation, but they said it would all be worked out by HMRC. Is this right?


My PAYE income was 27k. I had work expenses of 1.8k (I work from home so have gas/electricity/travel to the office). My loss from self employment was 2.8k, so is my income £22,400, and should I only pay tax on this?? I keep checking the calculation online and it's telling me I'm due a refund of £6.60p, which doesn't seem right considering I've paid tax on 27k and not my actual income.

I hope this makes sense. Thank you

You don't 'reduce' your PAYE income as you have described. The loss claim is made on the self employment section. Check the loss claim section and, if you still need help, come back to us. However, of more interest is the expenses that you have claimed, I presume against your PAYE income. There are VERY FEW expenses that an employee can claim and travel to the office is generally not one of them.. Obviously there are exceptions but you need to be careful that the claim is warranted. Gas and electric- can you justify the amounts?

https://www.gov.uk/tax-relief-for-employees/working-at-home

CakeCrusader

[Deleted User] wrote:

You don't 'reduce' your PAYE income as you have described. The loss claim is made on the self employment section. Check the loss claim section and, if you still need help, come back to us. However, of more interest is the expenses that you have claimed, I presume against your PAYE income. There are VERY FEW expenses that an employee can claim and travel to the office is generally not one of them.. Obviously there are exceptions but you need to be careful that the claim is warranted. Gas and electric- can you justify the amounts?

https://www.gov.uk/tax-relief-for-employees/working-at-home

I work from home, and usually only from home. On the odd occasion (like for training/meeting) I have to travel to London, and they refund a little but not all, so it's this at £65-80 a trip as I live a long way away and the train's not cheap. The gas and electricity is a percentage (it's not a lot, it works out at £20 a month or something. I work 60 hours a week from home if this is relevant). I also needed to replace the computer (which I need to do my job), which is why it's high this tax year. Work refund my broadband charges so these are not included as expenses. I pay for telephone calls to the office.

The loss is showing on the SE section, but it's not showing on the final calculation at the end, none of the SE is (although it's all documented and I can see it in the full return itself).

Thank you for your help. I'm just trying to make sure I do it properly but it's a little confusing

[Deleted User]

CakeCrusader wrote: »

I work from home, and usually only from home. On the odd occasion (like for training/meeting) I have to travel to London, and they refund a little but not all, so it's this at £65-80 a trip as I live a long way away and the train's not cheap. The gas and electricity is a percentage (it's not a lot, it works out at £20 a month or something. I work 60 hours a week from home if this is relevant). I also needed to replace the computer (which I need to do my job), which is why it's high this tax year. Work refund my broadband charges so these are not included as expenses. I pay for telephone calls to the office.

The loss is showing on the SE section, but it's not showing on the final calculation at the end, none of the SE is (although it's all documented and I can see it in the full return itself).

Thank you for your help. I'm just trying to make sure I do it properly but it's a little confusing

Did you put the loss in the box - 'loss from this tax year set against other income for the year 2025/16' ? If not that would be your problem.

CakeCrusader

[Deleted User] wrote:

Did you put the loss in the box - 'loss from this tax year set against other income for the year 2025/16' ? If not that would be your problem.

Yes. I went through it over the phone with HMRC and they told me to do this.