offsetting losses against property income

28/01/2019 15:41:49
I have losses from self-employment that I want to offset against income from property in the same tax year. If possible, I want to offset the total loss in this way and using this current tax return.

I've used traditional accounting (the helpsheets say you can't claim relief for a loss using cash basis). The loss is approx £600. The income from property (minus £1000 income from property allowance) is more than this.

What is the max amount of this £600 loss I can use to offset income from property received in the 2017-18 tax year? Ideally, I would like to use it all to reduce my tax bill in this return, but I've read the helpsheets, inputted the figures and it doesn't reduce the bill by much at all. I'd rather not carry forward the loss until next year. I know there's an option to offset the loss against income in 2016-17, but I don't know if there's a limit and again, I'd rather not do this either.

Can you advise me on how I can offset the maximum amount of this loss against the income from property, please? I think I'm not inputting the figuresd in the correct boxes. Thanks.

Re:offsetting losses against property income

28/01/2019 16:09:58

Thanks for your question.

How you claim losses from self employment depends if you use traditional accounting or cash basis.

Under cash basis you can only offset the losses against profits of the same trade or carry them forward against future profits of the same trade.

If you use traditional accounting the losses can be used against general income of the same tax year and can be carried back to previous tax years.

Please see the following guidance links:

Business Income Manual 85015

Business Income Manual 85060

Cash basis

The property income allowance can only be deducted from property income and the property allowance cannot create a loss.

I would suggest that you contact our Taxes Helpline so we can talk you through completing the online return.