11. Sole trader losses Flashcards
1
Q
Carry forward claims:
- Against what profits?
- Automatic / not automatic?
- Are partial claims allowed?
- Claim to be made by/within?
A
- Against same trading income
- Automatic
- Partial claims not allowed
- Establish loss with HMRC within 4 years.
2
Q
Relief against total income:
- Against what profits?
- Automatic / not automatic?
- Are partial claims allowed?
- Claim to be made by/within?
A
- Against total income or current and/or current year
- Not automatic
- Partial claims not allowed
- Claim made on 2nd 31st Jan following end of tax year
3
Q
What is the maximum relief from total income?
A
Higher of:
- £50,000
- 25% of ATI (total income - gross personal pension contributions)
4
Q
Relief against chargeable gains:
- When can this claim be made?
- Where is this loss shown?
- Claim to be made by/within?
A
- Only made following a claim for relief against total income
- Shown on separate CGT comp.
- Claim made on 2nd 31st Jan following end of tax year
5
Q
What is the maximum capital loss?
A
Lower of:
- remaining loss
- profits less c/y and b/f capital losses
6
Q
Comp for capital losses
A
Chargeable gains for year X
Capital losses of year (X)
Trading loss (X) AEA (12,300) (X) = Net chargeable gains before b/f capital losses
7
Q
Opening loss relief:
- Against what profits?
- Are partial claims allowed?
- Claim to be made by/within?
A
- Against total income of 3 prior years on FIFO basis
- Partial claims not allowed
- Claim made on 2nd 31st Jan following end of tax yea
8
Q
Terminal loss relief:
- Against what profits?
- Claim to be made by/within?
A
- Against trading income of previous 3 years on a LIFO basis
- Claim made within 4 years of end of tax year
9
Q
How is terminal loss calculated?
A
6 April before cessation to cessation
6 April before cessation to cessation profits X
Overlap profits not yet relieved X
12 months before 5 Apr before cessation
12 months before 5 Apr before cessation profits X
= Terminal loss X
