UK Being employed and self employed

[Jmay123]

Hi, if I am employed and use up my tax allowance in the employment, but recently also became self employed, if I have made a loss through my self employment will I be eligible for a tax refund?

 

[Truemanbrown]

Yes, and you have quite a few options.

Option 1 - You can set the losses off against general income for the:-

• current year;
• previous year;
• both current or previous year.

Can also be set off against capital gains.

Option 2 - You can set the losses off against profits of the same trade in future years.

Option 3 - A loss that is made in the year that the trader starts to trade or any of the three subsequent years (i.e. the first four years of the trade) can be carried back and set against total income of the three years before the tax year in which the loss was made, with earlier years taken in priority to later years. This could be highly profitable especially if you were an higher rate taxpayer.