What will the taxable income for 2010/11 be?

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Alpha has trading income of (£6,000) for the Y/E 30.9.2010 and (£4,000) Y/E 30.9.2011. He earns £15,500 from his part-time employment. He decides to set-off his trading loss against the total income for the preceding tax year and then the current year.

Asked by Katherine, Last updated: Nov 10, 2024

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John Smith

Answered Sep 09, 2016

Nil-explanation: the total income in the tax year 2010/11 is £15,500. the trading loss can be set-off against the general income of the current year and/or preceding year. it can be done for current year first or the preceding year first. if there is loss in both the current and preceding year and the trader wishes to set-off against the general income of the preceding year, he must set-off the losses of the preceding year first against the income of the preceding year then for the current year. hence, the loss of £6,000 will be set-off first leaving £9,500 (15,500 6,000). then, the trading loss of the current year of £4,000 will be set-off leaving £5,500. this will be covered by the personal allowance.