FHL and PAYE - which losses can I offset?
Discussion
My wife and I are just about to take ownership of a FHL which we intend to do up a little before renting as an airBnB.
As I understand it, either of us (but not both in the same year) can carry the business on their self assesment for tax purposes, so the question comes re: who is best placed to do so.
I earn approx £100k PAYE (subject to bonus - can be a bit over, bit under). My wife earns around £18k as a sole trader. We intend for my wife to include the FHL profits on her tax return.
Question is, for the first 2 years when we are likely to have losses (decorating, replacing furniture, new bathrooms etc) can I record these losses against my PAYE to reduce my 40/60% tax? Noting HMRC says losses are transferrable so long as the business intends to turn a profit within 5years, does that mean when it does turn a profit my wife won't be able to "take over" the business for tax purposes (and only pay 20% on profits, rather than the 40/60% I would as my earnings would go over £100K)?
Interested to understand how simple this would be before getting professional advice, as otherwise I'm comfortable doing my own SA tax return.
Thanks!
As I understand it, either of us (but not both in the same year) can carry the business on their self assesment for tax purposes, so the question comes re: who is best placed to do so.
I earn approx £100k PAYE (subject to bonus - can be a bit over, bit under). My wife earns around £18k as a sole trader. We intend for my wife to include the FHL profits on her tax return.
Question is, for the first 2 years when we are likely to have losses (decorating, replacing furniture, new bathrooms etc) can I record these losses against my PAYE to reduce my 40/60% tax? Noting HMRC says losses are transferrable so long as the business intends to turn a profit within 5years, does that mean when it does turn a profit my wife won't be able to "take over" the business for tax purposes (and only pay 20% on profits, rather than the 40/60% I would as my earnings would go over £100K)?
Interested to understand how simple this would be before getting professional advice, as otherwise I'm comfortable doing my own SA tax return.
Thanks!
Eric Mc said:
Boom. That's definitive. Thanks!Gassing Station | Finance | Top of Page | What's New | My Stuff