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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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if i want to use previous years losses against class 4 national

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if i want to use previous years losses against class 4 national insurance (since this is the first year i will be above the threshold to pay), how far back can i go? for example if for the last 6 tax years i have had a loss, e.g. 6-7 £100 loss, 7-8 £100 loss 8-9 £100 loss, 10-11 £100 loss, 11-12 £100 loss then for example say 12-13 150 profit
can i use all of the 6 years added together? 400 loss and 150 profit = 250 loss carried forward to now? or is there a limit to how many tax years back you can count? and have i added it correctly adding the loss then deducting profit to get the loss amount to carry forward?


So long as you registered the adjusted trading loss for each accounting period via the appropriate tax return for that trading year, there is no time limit for them to be used against trading profits. You need to use the self-employment pages full here to offset the losses brought forward. Your figures look fine.

Take a look at the notes here for a working sheet which may help you and the notes on page SEFN21 and SEFN22 here.

I hope this helps but let me know if you have any further questions.

Customer: replied 3 years ago.

Ok so i have registered the loss each year since 4-5 tax return, and used it against my employed income. for class 4 purposes then if i add up the losses over the years and take into account (deduct) my recent years of profit it amounts to 12,500 to carry forward against class 4, so do i put this total amount on this years return then the adjustments to class 4 box?

The basic rule is that you can use trade losses from earlier years that have not been offset against profits which would be chargeable to Class 4 NIC. I would recommend that you use the worksheet that I gave you a link to before you put any figures into your self-employment pages.

Customer: replied 3 years ago.

my losses were only offset against employed income (class1).

Just to be clear all losses (self employed) came to say 19000, then I made 7,000 profit (still below class 4 thresold) so losses to carry forward would be 12,000 would I enter this figure in the adjustment box, or do I include 13-14 tax yr if so then 13-14 profit is 14,000 that would mean for class 4 a profit of 2,000 (12000 losses add the 14,000 profit)? And perhaps this is what I would enter in the adjustment box?

In the working sheet, box 2 is £14,000, box 3 is £0, box 4 is £14,000, box 5 0 is £0, box 6 is £12,000, box 7 is £12,000 and box 8 is £12,000.

You used £7,000 of the losses against the profit of £7,000. The figure to go into the adjustment box 102 is £12,000. You don't add the 13/14 profit. That will be reduced by the losses not relieved for Class 4 NIC purposes.
Customer: replied 3 years ago.

Thats great. I am with you so far, just one further point to clear up and i should be done :

Say profit is 14000 for (13/14) this is then reduced by the class 4 threshold 14000 – 7555 = 6445 then minus the loss carried forward 6445 minus the 12000 = -5555 so means not eligible for class 4 this yr .

Is this -5555 then carried forward to use against class 4 next yr, or is it just a one off adjustment and I have used my loss of 12000 up on this occasion and next yr I will pay class 4? or next yr can i write the 5555 in the adjustment box? thanks

You cannot limit your claim to get down to the class 4 NIC threshold. In the same way that losses have to be used against the next available profits for income tax purposes regardless of thresholds or personal allowances, so the same principle applies for Class 4 NIC purposes.

Customer: replied 3 years ago.

Ok, so i think you are saying that, 'that will be it' ? ( i don't expect succeeding years to incur losses) ?

By using the losses not relieved for Class 4 NIC purposes against the 13/14 profit, you have exhausted them so there is nothing to carry forward.
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