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I am self employed, for the year 2012/13 I have two partnerships…

I am self employed, for...
I am self employed, for the year 2012/13 I have two partnerships with my wife,
one partnership made a profit from which I get 50% = £50,000,
the other partnership made a loss of which I have 50% = £20,000

How does this work for tax, the second partnership is likely to make another loss in 2013/14 as it's a start up which is taking a lot of money & re-investment. Can I offset the loss against the profit share I made from the other unrelated business profit so that I would get my tax calculation based on a personal income of £30,000?
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Answered in 22 minutes by:
4/10/2013
Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 16,000
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi.

When you are in a partnership, for tax purposes you are effectively self-employed and you are taxable on your share of the partnership profit. Where you have more than one partnership, you combine your profit share from each and pay tax on the total less personal allowances.

If you have a loss in one partnership, you can offset this against any other income you have in the same tax year or the previous tax year or a combination of the two if the loss is big enough. In the first four years of a business, you can carry your loss back three years and offset it against income from those years, earliest years first, until the loss is exhausted. Any unused losses can only be carried forward for offset against profits from the same business in future tax years.

Take a look at HS227 here for more information on business losses and how they can be utilised.

I hope this helps but let me know if you have any further questions.
Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 16,000
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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