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Self-employed losses

Greetings!

Not really a big deal - but as my tax year has ended I am spending inordinate amounts of time assessing the damage, and I have just spotted the following:

tax year 08/09 - my business had just started, and I made a loss of £201, which I marked to carry forward in box 34.

tax year 09/10 - my business made a small profit, but I earned below the tax allowance threshold. I marked in the box that, once again, I would be carrying it forward in box 34.

tax year 10/11 - my business made a healthy profit... I forgot all about my carried-forward loss and submitted the tax return without any reference to it.

Two questions, if you would be kind enough to help:

1) Have I declared my losses correctly? Am I even understanding the system right?

2) Have I lost my loss forever? If not, what do I do?

I know it's not much, but getting circa £40 back would be better than nothing :-)

Thanks as always

Reece

Reply to
Reece Bythell
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At the time you could have set the loss against other income of the same or the previous year. It's too late now.

You could have set the loss against capital gains of the same year. It's too late now.

You could have set the loss against earlier years. It's too late now.

You carried forward the loss which is correct.

You should have set the loss against the first available profits.

I don't suppose there should have been any losses to carry forward. If there were you could amend your tax return.

Reply to
Peter Saxton

My income was below the tax threshold that year - so surely doing so would have made no difference, since I paid no tax anyway?

Neither of these applied.

But surely if I'd done so it would have made no difference, therefore making the whole exercise pointless? I paid no tax anyway that year as all my income was below the tax threshold.

I'm not sure you're understanding.

08/09 - £201 loss; all income below threshold, no tax to pay - loss carried forward

09/10 - all income below threshold, no tax to pay - £201 loss still carried forward

10/11 - profit of more than the tax threshold - so now I should be able to "use" my loss?

Am I misunderstanding something?

Reece

Reply to
Reece Bythell

Write to the tax office explaining the situation. You might be surprised with a cheque in the post.

(I once misdeclared a capital gain as ordinary income, not realising that meant more tax liability. I didn't find out until 3-4 years later, but I eventually got £6K back!)

Reply to
BartC

No it doesn't make the whole exercise pointless.

By using it against the first profit that you make means that you can't "save it up" for another year.

Offsetting it against profit made in a year when your income is below the tax threshold may not be to your advantage, but it is to the revenues'.

Not if Peter is right that you *must* us it against the first year that you make a profit.

Or looking at it another way, you don't generate separate "profit" and "loss" accounts each year, you generate a single "profit and loss", which is the accumulated "cash" position of the company.

yes.

tim

Reply to
tim....

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