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Hello Sir,
Could you please give me the solution of the below two questions
Shula commenced trading on 1st April 2014 and incurred trading loss of £20000 in the year to 31st March 2015.Shula realised a capital gain of £11000 in 2014/15.In the year to 31st March 2016 Shula made a trading profit of £25000.Shula had no other income in any year.What is the optimum amount of loss that Shula should relieve in 2015/16 to minimise her overall income tax liability??
Answer :20,000
2)Rekha had the following trading profits from a business that she has run for many years.
Year ended Dec 2013. 25000
Year ended Dec 2014. (40000)loss
Rekha’s only other income is £6000(gross) of bank interest received each year and a capital gain of £2000 realised in 2013/14.Assuming all beneficial claims are made,how much of the trading loss remains to be carried forward to 2015/16?
Answer is 9000.
Here are what I think..
1. For 15/16, losses of £20000 should be carried forward against £25000 at full. (£25000-£31865) is saved from the higher rate tax.
2. Concerning the relief of trading losses against capital gains, here is what the lecture book says:’ the relief is an extension to current year and carry back relief against total income…’ Pay attention to ‘and’. In normal claim,we deduct trading losses against current and/or previous year. As for this relief for capital gains, the condition that it’s only relieved from capital gains after the relief is set against current and previous year. As in tax year15/16, total income is less than personal allowance, therefore, the beneficial way would be leave the income to PA instead of using trading losses from 14/15
Hope this will help…
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