Reduce prior year tax bill if now out of work?

LukeHayward

Hello

I was a higher rate taxpayer last tax year but I am now out of work and likely to be out of work for the next 6 - 12 months for family reasons.

As i'll have very low earnings this tax year onwards, is there anything i can do to reduce my tax bill from last tax year (the one just ended)?  I guess it's not possible to use this year's tax allowance against last year's income.

Many thanks

Luke

FatherTireseus

No, you're right that you can't use this year's tax allowance against last year's income.

A couple of things spring to mind but they are associated with giving away money or investing, which may not be relevant to you if you're not working and looking to cut expenditure.  Others may know more than I do.....

If you make any charitable donations via gift aid, then anything you donate in the current tax year can be carried back and treated as though they were made in the previous tax year.  

Similarly if you make any EIS investments, you can carry them back to the previous year as long as the limit for the previous year isn't exceeded (but the limit is £1m).  However EIS investments are quite risky and it can be very difficult to sell shares (and you have to hold them for two years to retain the tax relief) so it isn't worth doing simply for the tax benefits in my view.

Jeremy535897

No. You can carry back gift aid donations in certain circumstances:
https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/giving-charity#toc-can-i-carry-back-gift-aid-donations-

If you start a trade and make a loss, you may be able to carry back the loss to earlier years. It's a complex area.

LukeHayward

Ok great - many thanks for your help. Those situations are not relevant to my circumstances but thank you for confirming that I'm not missing a trick for my situation.