Can individual offset losses against profit in annual tax return?

maxima

maxima

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I've read T2W article on income tax. It says that sole traders can offset trading losses and expenses (broker fees, software etc) against profit in their income tax.

My question is - I am not registered as a sole trader and I have day job. Can I still offset losses and expenses?
 
Yes unless you use spread betting in which case you cant. It may be best do it as capital gains.


Paul
 
Here is what my accountant just said:
It would appear that you have a trade as an individual, any profits would be included on your tax return and if there are any losses these can be carried forward to future profits, they are not available to reduce the tax bill from your other income.
Click to expand...
is this correct or do I need another accountant?
 
maxima said:
Here is what my accountant just said:
is this correct or do I need another accountant?
Click to expand...

He is correct, in general capital losses can only offset capital gains not income tax.

If you sold a second house for example and made a capital gain on it you could offset any trading losses against that gain but not against your income tax bill.
 
just to pick up on this thread. i thought i'd read somewhere that if you are investing in shares in the "conventional" sense for divendend income and capital gain the capital gain is taxed via Capital Gains Tax , but if you are trading, perhaps in derivative instruments as well as ordinary shares over a shorter periods the difference in the buy and sell price is taxed as income. In which case the former would be subject to GCT tax, but the later income tax. If this is right would i be right in thinking any "trading loses" could be offset against other income subject to income tax in the same tax year??????
 
If you are trading in order to make a profit rather than investing for the longer term then the income is treated as self employment income for tax purposes. Any losses can be offset against profits made in the previous year, or offset against income from employment. Any unrelieved losses would be carried forward, but would only be available to offset against self employment income.
 
Anyone knows how to fill tax return form correctly to record futures trading loss?
 
I would recommend you ask a professional to deal with the return for you where trading losses are concerned, particularly as there are options as to how to deal with it (carry back, carry forward, offeset etc.). Recording the loss will be different depending on which option suits you better.
 
This all depends on what instrument you're trading, how much you make in profitable years and how HMRC will classify your trading income (capital gain or subject to income tax)which I think can vary per instrument. I'd advise you to give the helpline a call and ask to speak to a capital gains tax technician. Explain your situation and they will tell you what to do or he will find out and call you back. You can then set up an appointment with your local tax office and they will help you fill in the return. :)
 
Thank you.

My accountant did the whole thing for 40 quid. I am happy for now.
 
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