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!
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Net income of £3,000
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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:
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Reduced their previous year’s income by £18,000 (from £105,000 to £87,000)
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Preserved their full personal allowance this year
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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.
