Still in loss so why taxed on single-year profit?Make Text Bigger
I have submitted my tax return (SA100/SA105 etc) for 2015-16, which is the first year for which I have made an ‘in-year’ profit (around £5k) – so that’s the number in Box 38. However, this has really only reduced my cumulative losses (from brought-forward £20k loss up to April 2015, i.e. the Box 39 figure, to become carried-forward loss of £15k at April 2016, i.e. the Box 43 figure). So that’s still a zero in Box 40, “Taxable proifit for the year”.
Now, I always thought that I would not start paying tax on property profits, until I started to make a CUMULATIVE profit, i.e. after offsetting losses against profits, for all years starting from the first year – NOT merely the first time an in-year profit occurred [unless that had wiped out all the cumulative, brought-forward losses, which is not the case here].
HOWEVER, I am also an employee; and I have just received an amended tax code for the current year, which treats this £5k (the Box 38 amount) as an amount to be taxed over 2016-17. The HMRC said that it only looks at one year’s figures at a time; so I am now confused as to (a) what is the point of keeping track of past losses anyway if HMRC are NOT letting us offset these against future profits; and (b) why is Box 40 so misleadingly labelled as “taxable profit”, if the profit that they ACTUALLY tax us on is a completely different amount?
No doubt I am missing something here, so I would be most grateful if someone could explain how this is ACTUALLY supposed to work.
Many thanks, folks.
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.