As long as you are genuinely in business to earn a profit then you can offset your losses against any current year income, or against past or future profits of the trade itself. There are a couple of restrictions.
The easiest way and quickest way to claim a tax refund is through your personal tax return. For this, you need to be trading as a sole trader or partnership. The claim is the same for both. There are four ways to off set a loss:
1. You can claim relief against any other income for this tax year, the previous tax year or both. If your income is nil or less than the loss, you can reduce your capital gains for that year.
2. You can claim relief against your income for earlier years.
3. You can claim relief against profits of the same trade in earlier years.
4. You can carry forward the loss against future profits of the same trade.
You can carry back losses incurred in the opening years of a trade for three years. You need to make sure your claim is made within the time limit.
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