Carrying forward losses over multiple years: a bug in the self-assessment form?

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    #16
    If you click on the ? by the "Loss to carry forward to following year, including unused losses brought forward:"

    it takes you to this page - https://www.tax.service.gov.uk/infor...rryForwardHelp

    this says "If your loss is higher than your profit, provide the remaining losses available to carry forward in the any other information for other property income."

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      #17
      Thanks Banzai - I had the same issue and that is how I read the notes that appeared in the question mark on the online form (similar to the note referred to by mjlandlord above but the note is slightly longer for box 39 on the online form). I thought I was going mad so it's assuring to find that I was not the only one panicking!

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        #18
        Further to my post above, this is also confirmed by HMRC in answer to a forum question:

        https://online.hmrc.gov.uk/webchatpr...list/2792.page

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          #19
          About Carrying forward losses over multiple years: a bug in the self-assessment form? Hi can I check I've understood correct
          if profit is 3000 and brought forward loss is 10000 do I enter 3000 in loss brought forward ? Where do I enter remaining

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            #20
            I am currently struggling with this. It appears that you have to enter the new value to be carried forward in a text box. This seems unsatisfactory, but since there was no previous way to automatically carry the figure forwards perhaps it doesn't matter too much.

            What I AM struggling with though is the balance of the finance costs. It seems to me that I get 20% credit for the lowest of a) 50% of finance costs b) profit or c) total income, but if I wipe out my profit this year with losses carried forwards then that's 20% of nothing. I seem to be contributing £4k of previous losses but losing the finance cost write-off, because it only gives me £120 difference in the tax I owe.

            Am I mis-reading this? Thanks in advance.

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              #21
              Originally posted by perran142 View Post
              It seems to me that I get 20% credit for the lowest of a) 50% of finance costs b) profit or c) total income
              I don't understand this part.
              You calculate the tax due on your income, with the carried forward loss and other allowances factored in.
              Then write back the restricted finance cost relief.
              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).

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                #22
                Hi, thanks for looking at this.

                In the initial calculation you deduct 50% of the finance costs, and bring forward losses from previous years. This reduces your profit to zero. It then calculates the tax due. Only then does it come to subtracting 20% tax allowance for the remaining 50% of finance costs.

                But this appears not to be 20% of the remaining finance costs. Instead it's 20% of the lowest of a) 50% of finance costs or b) profit or c) total income. Since I've already reduced my profit to zero by bringing forward losses, it says "reduced to maximum allowable" and gives a figure of Zero.

                If I put in £500 of losses brought forward then the finance costs are allowed and my tax bill is one figure. If I put in £5000 of losses brought forward then the finance costs are "reduced to maximum allowable" and my tax bill is unchanged.

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                  #23
                  OK, thanks for explaining!
                  That makes sense.

                  I don't know how you would achieve this online, but I think the trick is to carry forward some of the losses that you're currently recognising.

                  You can't get your tax to be negative, HMRC will only rebate tax you're overpaid, they can't get a negative tax amount from income.

                  So you need to move some of the £5000 loss into the next tax year otherwise you'll lose some of the benefit of those losses. It should be possible to work out what 20% of the 50% finance cost is and back calculate the amount of losses to defer recognising.
                  That should mean you will still get to zero tax due, and have some losses for next year.

                  I'm not an accountant, so while I can see that that's the obvious solution, I don't know if it's allowed or not (but I can't see why it wouldn't be).
                  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).

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                    #24
                    I've certainly played around with the figures and tried that, but I think it said somewhere that losses must be used in the first year where they are eligible which implies all rather than some.

                    I'm going to have to ask them to confirm. The form doesn't mention carrying forward losses to next year and you have to just put it into a text box, which seems deeply unsatisfactory but maybe the form just isn't very good.

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                      #25
                      Having spoken with HMRC today, it appears that I use losses carried forward to write down the profit up to the full amount of profit. Any remaining losses are brought forward to next year, but this can't be entered on the online form and so it has to be put in the free-form text box.

                      This means that at the end of the calculation there is no write-down for the remaining 50% of finance costs. This amount is entered in box 45 "Unused residential finance costs brought forward". Box numbers can be found by viewing a copy of your return as a pdf.

                      It seems a little unsatisfactory that I end up with two separate amounts to bring forward and one of them only in a text box, but that is my current understanding. I figure that as long as I'm clear what I'm doing it should be OK even if it's wrong! :-)

                      Comment


                        #26
                        There do seem to be a number of issues with this form.
                        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


                          #27
                          what is also very unfair is that if you have carry forward losses .. but your net income is below the tax free threshold you still need to apply your losses against this

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