Help needed from an accountant - what is hissalary?

[HollowTalk]

Hope an accountant can help - this is for my son.

He's self-employed in a creative job. His turnover for 2019-20 was around £31,000. His allowable expenses were around £9,000, which gave him a salary of about £22,000. However, in the year 2017-18 he had a loss of about £4,000.

He's filling in his self-assessment form and is asked whether he wants to bring this loss forward to reduce his tax this year. I don't know why that didn't happen last year - he may well have said no.

If he says yes to this, it would give him a taxable profit of around £18,000. However, he's getting married soon to someone who is from another country. He has to sponsor her and his salary has to be at least £18,600 before tax in order to do this.

Will the govt class his income as £22,000 or £18,000? I say it's £22,000 as the rest is a tax rebate. Does anyone agree?

The difference in his tax payment this year is about £800 and he's happy to forego that if it means he can show a higher salary.

Any knowledgeable people out there? We'd be really grateful for any help.

It would also be possible to amend last years return to claim the loss relief as well.

The above should also read "may be possible to carry back" as opposed to "would"

He also had scope to potentially use opening years loss relief, which means that the loss would not impact future years at all...

Please can you explain this?

Last year he was away from home and so I have no idea what he entered. He's meticulous about doing things the right way and he'd be happy to learn how to do it properly. I just wonder whether it's worth paying a few hundred for an accountant when he's earning so little.

It's definitely worth paying it as, based on the limited information you have it sounds like he doesn't know how to utilise losses - and getting it wrong could have consequences not just for tax but for immigration sponsorship.

There could potentially be a £1,600+ tax rebate knocking around there which would far outweigh accountancy fees. Just sitting down with an accountant would be enough to see if it was worth pursuing.

That's great advice, thanks. I'll get him to get in touch with someone in the next week, as time's running out.

Thanks to everyone for their advice on here. I really appreciate it.

he can amend last year's tax return online until 31.1.21.

Get him to go online, amend last years to use the brought forward loss.

Yes he can carry the loss back but you cannot do that simply online, you can only amend the year to 31.3.20 and the year to 31.3.19. To amend the years before, he would have to call HMRC to do it and I think they have reduced the number of years he can go back.

Then his income for the recent tax year is his net profit.

I think he'd be able to amend his previous return to say 'yes' to bringing the loss forward for that year, because if they're asking this year, they must have asked the previous year. He could call them - I know I've found them very useful in the past. Thanks very much, @bimblingonagain.

if he can amend last years return successfully then he doesnt need to call them, but it is probably a good idea that he does, as PP have mentioned, it coudl be costly if he gets it wrong.

(When you finally get thorough) they can be really helpful.

Good on him for doing it himself. If he is not sure about something, you can ask for him on here. Just make sure you read all the answers as some are from practicing accountants and some are not.

If his affairs become complex, he should be able to find an accountant that will do his tax return for a few hundred pounds.

Why does he not just go to an accountant to sort this out. Some of the answers on here not correct. In most cases an accountant can save you more than they cost. I am a retired accountant, but not willing to comment regarding documentation I have not read thoroughly.

I'm actually going to say speak to an immigration lawyer before an accountant as there is a 10% allowance for most visas meaning it might not matter

@missbipolar

I'm actually going to say speak to an immigration lawyer before an accountant as there is a 10% allowance for most visas meaning it might not matter

This. x 100% I wrote below about the importance of taking professional advice on this matter rather than simply the people here. They are all trying to be helpful but as someone who used to oversee a department that included visa applications I know one wrong comma, one wrong word can be if great import. A regular accountant can advise how to “get to the right figure”, but you need to make sure how that figure is defined in law. Regulations are precise and if you get it wrong implications are dire. Best to get it right first time. Good luck.

Just a little update. He spoke to someone at Immigration today - it was a free call to an adviser, on the government website. They were really useful in terms of what evidence he needs to provide for his fiancee's sponsorship.

Tomorrow he'll call HMRC and talk to them. He's happy to forgo the loss adjustment thing if it means his salary looks higher - he's going to be open about that with them.

Thanks, everyone, for your advice. I really appreciate it.