£5,514 tax saving for a client

Get the Maximum Out of a Loss Did you know that if your business makes a loss this year, you can carry it back to reduce tax from the previous year — and potentially get a cash refund from HMRC? We just helped a client claim back £5,514 this way. Here’s what happened: In the latest tax year, they made a £18,000 trading loss.They also had a rental business generating £21,000 per year. Without s.64 election, their net income for the year would have been just £3,000, but that means they wasted £9,570 of personal allowance! Net income of £3,000 Wasted £9,000 of personal allowance Instead, we structured it differently using s.64 ITA 2007 (trade loss relief).By carrying the loss back to the previous tax year, we: Reduced their previous year’s income by £18,000 (from £105,000 to £87,000) Preserved their full personal allowance this year Secured an HMRC refund of £5,514 Accountancy is more than just filling in forms.Smart structuring can turn a loss into cash in your pocket.