I have spent many hours pondering on this problem as i seem to interpret the guidance differently every time I read it
My client is a self-employed builder, a partner in Income from property and also receives a private pension, not being of state pension age yet.
Due to ill health he has not worked a great deal for the past 2 years and has made a loss both years with his building work.
The pension utilises all his personal allowances and he pays tax through PAYE on the balance of the pension. He received a small profit from the property partnership.
The outcome is that he pays tax on the income from property and has a loss against the "earned income" (building)
Is there any way to set the loss against the pension?
I cant see this being so, but would really appreciate some thoughts on this.
Thank you.
Jay
Sorry ommitted information.
New Client
Loss for last year C/F by previous Accountant, not sure why it was not used.
This years loss I set against total income but am I right in thinking as the loss was carried forward it must now be used for the same trade income so now carried forward again?
-- Edited by Jay on Thursday 5th of July 2012 09:39:18 AM
In regards to the losses for last years tax return, it could have been a.) an error by the previous accountant or b.) the losses may have been brought forward from the previous years (sole trader) and hence must be carried forward again to set off against income from that same trade in the future.
For this year, the sole trader loss can be offset against other incomes as you said.
I'd probably get a copy of last years tax return, accounts (sole trader) and tax comp, prior to giving your client a definitive answer for this tax year.
