Tax losses

If you have incurred a loss in your self employment business, you are entitled to relief for such losses.

If a loss arises from a self employed business (that is, not a hobby but a viable, income-generating business activity on which you have earned less than you have spent), then you will be able to offset the trading loss against your total taxable income for the year, or carry it back to offset it against your total taxable income arising in the previous year.

A trading loss can also be set against your taxable profits arising from the sale of investments or other assets that arise in the same or preceding year, providing you observe some of the restrictions of use of such losses. Provisions that govern the relief of trading losses are complex and if necessary, you should seek professional advice (contact an accountant) before making such claims on your personal tax returns.

If you are making a loss it might be worth trying to find out if you are entitled to any government or local authorities funding for your business. Check the Grants Section of the Gov.uk website for schemes which may be available to you.

© Anna Bulmer 2012

The article is for information only, and not for the purpose of providing accounting and taxation advice. Readers should consult an accountant for accounting and taxation advice on specific matters.

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