This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Offsetting Business losses against Income Tax

freeman95
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!

Jack

pawncob
Posts:5090
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

wamstax
Posts:2019
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

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
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites


Return to “Company Taxation”