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Where Taxpayers and Advisers Meet

Offsetting Business losses against Income Tax

Posts: 2
Joined: Sun Jul 10, 2016 4:16 pm

Offsetting Business losses against Income Tax

Postby freeman95 » Sun Aug 25, 2019 10:39 pm

Hi... In a nutshell I'm looking at some advice in regards to if I'm able to offset business costs incurred as a Sole Trader against the income tax I pay as an employee of another company..

I'm debating whether or not to set up a business as a sole-trader, and the business is something where it may literally not make a penny.. However it might.. that being said:

If I did setup a sole-trader business, could I offset potential costs incurred from the business against my income tax, regardless of profit made? So for example say I bought some office equipment and a PC (£1000 say), and I had every intention of using this for my business.. but it never materialised into earning any money - Could I still offset that £1000 cost against my PAYE tax arrangement with my employer.

Sorry If I havn't worded this very well - Thanks in advance!


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Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Offsetting Business losses against Income Tax

Postby pawncob » Mon Aug 26, 2019 8:57 pm

Any losses, including capital allowances, can be offset against your TOTAL income.
With a pinch of salt take what I say, but don't exceed your RDA

Posts: 1880
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen

Re: Offsetting Business losses against Income Tax

Postby wamstax » Mon Aug 26, 2019 10:05 pm

Yes but to add to Pawncob's explanation I would amplify that TRADE losses can only be set off against other income IF and only if a trade is carried on on a commercial basis with a view to profits but in the event a loss is incurred. If the trade never actually starts then it would not be a trade loss and you would not be able to set that off against your employment income.
regards and hope this helps
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