Losses incurred as a Sole Trader

A: If you incur losses in your sole trade these can be carried forward indefinitely year on year, until such time that you generate profits to set off against. It is therefore very important to ascertain that you have captured all business expenditure in the year so that the correct loss can be carried forward for offset.

If you have incurred a loss it can also be offset against other income you have earned in the year, for example if you had P60 income.

If you are married and jointly assessed, and if the loss cannot be offset against your own other income sources, it can set off against your Spouses income in the current year.

Once you have offset against both your spouse and your own other income, the excess can be carried forward against your sole trade future profits.

As you can see it can be a tricky area and it is crucial that you capture all available losses, therefore it is very important that you consult an accountant regarding the same.

Date published 23 Sep 2015

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.