Your loss or HMRC’s?

If you make a loss, as we all do from time to time, make sure you use it to your advantage by claiming tax relief on it!
You can offset a loss against other taxable income (and then any capital gains) for the current tax year or your total income (and then any capital gains) for the previous tax year.
Furthermore if you make a loss within the first four years of a business, as many startups do, you can offset this against your total income for the previous three tax years including earnings from regular employment.
There are a few gotchas in that you must start with the earliest of these and use the maximum amount of the loss for each year ie you can’t mix and match to get the most out of the years with the most favourable tax rates to claim relief on.
However, if you have paid any income tax during the past three years, including PAYE from full or part time employment this should bag you a nice little tax repayment which should help to alleviate the pain of a business loss.
If you’ve still not managed to use the loss then you can carry it forward indefinitely to offset against the first profits your business makes.
NB. In order to claim for a loss, you must inform HMRC within a year of the 31/1 following the year in which you made the loss.

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