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Norma who had been in business as a confectioner since 1 may 2014 disposed of the business and retired on 31 may 2018. She does not intend to start any other business, but will be employed part time from 1 June 2018 on an annual salary of 11400. Her trading profit/losses as adjusted for tax were
P/e 31.12.14 21000 profit
Y/e 31.12.15 17000 profit
Y/e 31.12.16 16900 profit
Y/e 31.12.17 8835 profit
P/e 31.5.18 (11000) lossNorma has received bank interest of 3250 each year since April 2014. In addition she realized taxable gain of 35000 in June 2017. Taxable gain does not qualify for ER and it is not in relation to residential property
Explain options available to Norma to utilize the loss and explain effect on her tax liability of loss relief claims identified
Sir, one of the option here is that trading loss of 18/19 can be set off against total income of 18/19 and/or 17/18. Now if we explain this option further then we can say that setting the loss against total income of 18/19 first would waste complete personal allowance and save no tax. Remaining loss of 2500 can be set off against total income of 17/18 wasting part of personal allowance and saving no tax.
Sir is only this fine, OR do we have to explain other way also i.e setting the loss against total income of 17/18 first would waste complete P.A and save no tax. Remaining loss of 3165…………………………………..
The answer should not only include relief for the loss against total income, but should also go on to explain the extension claim against chargeable gains and should also include terminal loss relief
Thats right but I want to ask that when explaining relief against total income i.e trading loss of 18/19 can be set off against total income of 18/19 and/or 17/18. Now when explaining this, do I have to write both below paragraphs OR is just writing any one para between the two is fine
Setting the loss against total income of 18/19 first would waste complete personal allowance and save no tax. Remaining loss of 2500 can be set off against total income of 17/18 wasting part of personal allowance and saving no tax.
Setting the loss against total income of 17/18 first would waste complete P.A and save no tax. Remaining loss of 3165 can be set off against total income of 18/19 wasting part of personal allowance and saving no tax.
You should be stating that a claim against either the total income of 18/19 OR the total income of 17/18 would save no tax with the reason why – what if anything in the answer did you not understand?
I have understood the answer, but what confusion I have is that:
1) Trading loss of 18/19 can be set off against total income of 18/19 and/or 17/18.
2) Setting the loss against total income of 18/19 first would waste complete personal allowance and save no tax. Remaining loss of 2500 can be set off against total income of 17/18 wasting part of personal allowance and saving no tax.
3) Setting the loss against total income of 17/18 first would waste complete P.A and save no tax. Remaining loss of 3165 can be set off against total income of 18/19 wasting part of personal allowance and saving no tax
After writing first paragraph, do I have to write both para 2 and para 3 also? Or is just writing either para 2 or para 3 is sufficient?
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