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Tax Tutor.
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jagmeet
- Topics: 62
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sir in example 1 you said we cannot skip the c/f of losses and use the PA but in example two you are saying we can use the PA and leave the rest to offset against fiture trading profits
Tax Tutor
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Sorry but I do not recognise the statements you refer to here – if it is something I have said in the lectures then please give me the exact points at which these statements are being made and the lecture in which they are made and I will check it out for you but there are no situations in which partial claims may be made for income tax loss reliefs.
If you are comparing those 2 questions however then you may be confusing the fact that when a loss is C/F then the loss MUST be set against the first available future trading profit of the same trade BUT when the taxpayer is considering a claim in the current tax year and / or the preceding tax year against total income then the taxpayer may choose which of these claims if either (!) that he wishes to claim.
These are DIFFERENT loss reliefs!jagmeet
- Topics: 62
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Sir my question is that you only consider whether to use PA or the loss relief to offset your general income depending on the amount of your trading income and if you have made a claim to offset trade loss relief against general income you must offset it in full
E.g I l have trading income of 11500 and l claim to offset the loss against general income(in this case trading income is my only income)
I must use the available loss relief in full then consider the PA to get taxable income but if l have not made a claim which would be wise to do so then l can utilise my personal allowance without using the loss relief which can be carried forward right?Thanks please tell me if l am correct
Tax Tutor
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As I state above above the taxpayer can choose whether or not to make a claim against total (general) income, therefore if the taxpayer had total income of the tax year of £10,000 and a loss of £15,000 the taxpayer would NOT make a loss relief claim as it would simply waste the loss by deducting it from a figure of income that would have been reduced to nil by the use of the PA.
If however the loss was being carried forward to a tax year in which the only income of the taxpayer was trading income of £10,000 then the taxpayer has NO choice as the loss MUST be set off against the first available future trading profit of the same trade irrespective of the fact that the profit would have been reduced to nil by the PA
jagmeet
Tax Tutor
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