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When to set off trading losses sideways or backwards, and when to carry forward
KEY POINTS
- Sideways losses can be used in the current and preceding tax years.
- Beware of wasting personal allowances when allocating loss relief.
- Do not overlook relief for Class 4 National Insurance contribution purposes.
- Consider the applicable marginal tax liability.
- Consider whether the loss reliefs will be capped.
- Income losses can sometimes be set against capital gains.
- Loss relief may also be carried forward to succeeding corporate trades.
I recently experienced a moment’s confusion regarding the treatment of carried forward trading losses. I had initially thought that my software had a glitch but a quick check of the rules confirmed that the automatic calculation had indeed treated the loss correctly.
It did serve to remind me that we can...
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