Opening years losses and illustration
In this lesson, you'll learn how opening years trade losses work and why this relief is valuable when starting a sole trader business.
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In this lesson
- 0:00 Opening year trade losses explained
- 0:13 Carrying back losses three years
- 0:56 All or nothing claim basis
- 1:22 Ronan's loss relief worked example
- 2:43 Offsetting losses year by year
- 3:13 Key exam tips for opening losses
About this lesson
You'll discover how to carry back losses against your total income from the three prior years on a first in, first out basis—a key strategy for reclaiming tax paid on employment or investment income before you started trading. The lesson covers the mechanics of the claim, the all-or-nothing basis for each year, and the restriction that applies (the higher of £50,000 or 20% of adjusted total income). A worked example with Ronan shows you step-by-step how to calculate and claim opening years relief, demonstrating why this relief often generates significant tax refunds in your early years of self-employment.
Duration: 3m
Transcript
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