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Post Info TOPIC: AIA creating a loss


Master Book-keeper

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AIA creating a loss


Just want to check something out but I think this is ok.  Subby client bought a van in the 19/20 tax year.  He had mainly employed income with about 4k of self employed income, going forward he is self employed.  After expenses his profit is £2.7k and if I claim AIA on the van it creates a loss of £5.5k.

Am I right in thinking this loss will carry forward to next year?   Never done this on an AIA where there is insufficient profit as I would normally do CA instead, but client owes £6k to tax office which will reduce to 5k after this submission.  Allowing the loss to go forward will allow an extra 1k of tax reduction if not paid off by then.  (assuming profits allow) 



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Veteran Member

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Yep, if you create a taxable loss you can carry it forward to next year. As you say, normally it's not worth claiming AIA in these situations as it's a waste, but in your client's situation it makes sense.

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Guru

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Hi John

As Rachel says yes no problem with carry forwards but is this the best way to get the earliest relief on the loss, is it not beneficial for a current year claim against other income or even carry back to previous years. 



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



Master Book-keeper

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Artois wrote:

 As Rachel says yes no problem with carry forwards but is this the best way to get the earliest relief on the loss, is it not beneficial for a current year claim against other income or even carry back to previous years. 


 Unfortunately not in this case Doug, sporadic earnings up until this year.   He'd paid some tax on his employment income even though he didn't reach the personal allowance threshold, and combining that with expenses and CA (had I done it that way) more or less nets off the CIS paid. Now that I know this can be done for certain I think it's the best option, as the offset on CA reduces year on year.  Good suggestion though, so thank you.

 

Thanks Rachel



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.

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