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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I used your service recently and I am hoping you can help me

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Hi, I used your service recently and I am hoping you can help me again. Please note I do my own accounting and have very limited knowledge I’m afraid!
We are a husband & wife business partnership who bought a small retail business in April 2001 and paid 20k for goodwill. We intend to retire and stop trading Y/E March 2018, and will not be selling it as a going concern as it is/will be worthless by then.
As far as I can make out, I can use the 20k goodwill payment as a capital gains loss in the final end of year accounts. However using the full 20k amount will bring any profits we made in our final year to significantly less than the tax threshold, so I only actually need to use 10k of it for example.
As I understand it, any portion of the CG loss not used (eg 10k in this example) can then be carried forward to next year to offset against tax. However as we are retiring, we won’t actually be paying any tax from then on, as our incomes (mainly state pensions etc.) will both be less than the tax threshold.
Is it possible therefore in any way to use the balance of the CG loss (10k) to claim back any tax in any way? ie maybe start to apply the loss in the second to last year? Or will the Inland Revenue issue a rebate of any kind?
Your advice please!
Submitted: 8 months ago.
Category: Tax
Expert:  Jawaad Ahmed replied 8 months ago.

Hello

You only need to know that what is the tax treatment of capital losses? and this is for your real business or some kind of assignment?

Customer: replied 8 months ago.
Hi, Sorry I don't understand your response. Can you re-word it please.
Expert:  Jawaad Ahmed replied 8 months ago.

I want to know that is this your real life case or some kind of assignment questions?

Customer: replied 8 months ago.
OK, sorry, it's a real life case.
Expert:  Jawaad Ahmed replied 8 months ago.

Are you sure about that the 20k goodwill could be used as capital gain?

Customer: replied 8 months ago.
It's a loss not a gain. No i'm not sure, but that is what i've read ( i think). Is that not the case then?
Expert:  Jawaad Ahmed replied 8 months ago.

Let me check and will come back to you soon, thanks.

Customer: replied 8 months ago.
OK
Expert:  Jawaad Ahmed replied 8 months ago.

Hello

I would like to inform you that I have found some information for you regarding your issue so if that information helps you and you find it fruitful for you then you agree to pay $100, please let me know, thanks.

Customer: replied 8 months ago.
Hi, No thanks, ***** *****'t what I was after, I just wanted a straight forward answer to the last paragraph. Don't worry I'll sort something else out.
Thanks
Expert:  Jawaad Ahmed replied 8 months ago.

Okay, I can provide information for that only too for the current offer, if you find it useful then only accept or rate the answer, please let me know, thanks.

Customer: replied 8 months ago.
Hi, All I wanted was a straight forward answer to the question and you're not giving it. I've now asked for another 'expert, so forget it.
Expert:  bigduckontax replied 8 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

The news is not good. Here is the Gov UK advice of this subject:

'When you report a loss, the amount is deducted from the gains you made in the same tax year.

If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.'

So the remaining loss can be carried forward indefinitely. It could be used for example to offset gains on stocks and shares for example. There is a danger here that it may simply be money sunk and lost.

If you decide to rate me please ensure that you rate the correct expert.

I am so sorry to have to rain on your parade.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3369
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 8 months ago.

Thank you for your support.

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