carry forward losses- does it have to be in the next tax year ?

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    carry forward losses- does it have to be in the next tax year ?

    hello do i have to use carry forward losses the next year or can i decide which year to use them ? ,, obviously rental business has to continue ... my question is re my income will be below taxable amount with or without my carry forward losses for 2016/2017 thus it would be much more valuable to use losses in years when my income amount is taxable .. it seems the losses will be wasted if i have to use them in 2016/2017 tax year

    #2
    It does not have to be in the next year but it does have to be in the next year you have a profit

    For example you cannot

    Year 1 : Loss = £100
    Year 2 : Profit = 10,000 but no other income therefore no tax paid
    Year 3 : Profit = 10,000 - subtract the £100 loss

    So no you cannot do what you propose.

    Also it is for all your properties, not one by one (and it is also your total income that determines your tax bracket not rental income).

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      #3
      damn.. thanks for response

      Comment


        #4
        it doesnt seem very fair ...

        Comment


          #5
          From your use of the word "losses" I wonder if you're confusing things. In deciding how much tax you pay, HMRC look at your total UK income no matter where it comes from. And they evaluate this year on year. If, in a particular tax year, the property side of your income alone made a loss, but you earned over your personal allowance through other income sources, it's perfectly fair that you pay tax for that year.

          if your only income is property and you made an overall loss, you won't pay tax anyway because your income is negative. The fact that HMRC then let you carry that loss over seems to be to be entirely fair too... maybe too fair some would argue. What exactly is your complaint?

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            #6
            my complaint is that my total income for this year will be below £11,500 so no tax payable but for the next year it will be higher than that ... so what i find unfair is that you should be able to store tax losses to reduce tax payable above your personnel allowance in the first year that that occurs ..

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              #7
              you could write to the chancellor and suggest that it would be far simpler to wait until we're, say, 65 and then do the sums then for our working lifetimes all in one go instead of this silly year by year nonsense ;-)

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                #8
                it should be a simple policy that losses are against taxable income above the tax free threshold. everybody should have their allowance (even higher earners) and tax calculation should start above this level

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                  #9
                  "Losses" are not the same as income below a threshold.
                  A business loss is a loss, not earning enough to pay tax is low income.
                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment

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