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If you apply loss relief against total income and capital gains in the current year can you then carry it back to apply against total profit and capital gain or can you only apply against the gain if the total income was already nil? Also, can you apply against total income in current year, not gains but apply against total income and gains for the previous year? Many Thanks
I’m not entirely sure of your question but I will attempt to answer what I think you are asking.
Trading losses (sole trader) can be offset against total profits.
This means trading losses can be set against total profits then extended to set off against capital gains. This can be done in either current year or previous year. Losses must be set against total profits first before the loss can be extended to set off against gains.
You can choose to use the loss on previous year or current year in any order. More tax may be saved by setting off against higher rate tax payers income (40%) compared to higher rate gains (28%).
Also please note that the losses are offset BEFORE any annual or personal allowances.
Any losses that are carried forward can only be offset against future profits from the same trade.
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