Gareth Hughes and Co, Chartered Accountants and Business Advisers based in Llandudno Juntion, Conwy, Wales

Business news : April 2009

Don’t Lose Out on Loss Relief

With the economic downturn continuing to take its toll, Gareth Hughes & Co chartered accountants,  are reminding companies, partnerships, sole traders and individuals to make best use of their loss relief in trading in the most tax-effective way.

Companies can…

  • arrange for an earlier audit, where appropriate, finalising accounts and agreeing tax computations as quickly as possible to bring forward loss relief claims
  • make use of the measure announced in the November 2008 Pre-Budget Report, which allows them to set a loss of up to £50,000 against profits from the previous three years. This applies to losses in accounting periods ending between 25 November 2008 and 24 November this year
  • review projected results in the current accounting period to see if they stop paying corporation tax in quarterly instalments. This applies to large companies, defined for these purposes, those with profits of more than £1.5 million in each of two consecutive accounting periods
  • for investments standing at a loss now, the loss can be set against other capital gains.

Partnerships and sole traders can…

  • can carry back a trading loss of up to £50,000 against profits from the previous three years. Depending on the year end, this may result in problems in which case it may be worth considering changing the accounting date so that you can utilise the loss and also increase the loss by triggering overlap relief.

Individuals…

  • Can crystallise a capital loss on a property by transferring the property, other than their main residence, to someone other than their spouse or civil partner, such as a fiancée or fiancé, but care needs to be taken that no strings are attached – such as reverting to the donor after marriage – as the taxman is likely to think it had not been disposed of in the first place.

For advice on any of these issues, please contact Marcus Wilkes at Gareth Hughes & Co.

To find out more about how we can help you, or to arrange a free initial meeting, please contact us.