Discussion
If you operate as a sole trader (or are part of a partnership) and the business makes a loss, you can do the following with the loss -
carry the loss back one year to offset against TRADING PROFITS FROM THE SAME TRADE in the previous tax year.
use the loss in the tax year in which it was incurred to offeset against OTHER INCOME earned in the same tax year
carry the loss forward indefinitely to offset against future profits FROM THE SAME TRADE ONLY.
Your situation appears to fall into the middle scenario. So, to answer your question, yes you can offset the loss against salary income earned in a PAYE job in the same tax year and get some of the PAYE tax refunded to you.
Obviously, if you are running a business through a limited company, the company's losses can only be utilised against that same compay's other income or profits and the losses cannot be offset against your personal income.
You should only make loss claims once you are sure you have calculated the trading losses correctly making sure that Capital Allowances have been claimed (or disclaimed) where appropriate.
carry the loss back one year to offset against TRADING PROFITS FROM THE SAME TRADE in the previous tax year.
use the loss in the tax year in which it was incurred to offeset against OTHER INCOME earned in the same tax year
carry the loss forward indefinitely to offset against future profits FROM THE SAME TRADE ONLY.
Your situation appears to fall into the middle scenario. So, to answer your question, yes you can offset the loss against salary income earned in a PAYE job in the same tax year and get some of the PAYE tax refunded to you.
Obviously, if you are running a business through a limited company, the company's losses can only be utilised against that same compay's other income or profits and the losses cannot be offset against your personal income.
You should only make loss claims once you are sure you have calculated the trading losses correctly making sure that Capital Allowances have been claimed (or disclaimed) where appropriate.
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