Many people are unaware that if a trading loss is claimed against other income, either for the current or previous year, then by election this can be extended to capital gains, resulting in a further refund of taxes.
This can be of considerable benefit depending on the circumstances.
Example:
Steve makes a loss in 2015/16 of £50,000.
In 2015/16 he also has income from other sources of £30,000 and chargeable gains (after deducting the annual exemption) of £20,000.
His profit for 2016/17 is likely to be £10,000.
Clearly it is advantageous in this situation to relieve the loss sideways against his other income and extend the claim to cover the capital gains.
Relief is obtained at the earliest opportunity.
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