Running company loss against PAYE tax - how will it affect tax credits etc?

Denalihighway

Hi folks,
First post in this forum...

Basically:
I'm setting up a small business (music related), which will be sole trader. It will certainly run a small loss (€2,000 - €4,000pa) for the first couple of years.

I have a secure PAYE job also and I know I can offset these losses against my PAYE tax bill each year. I've read up a bit but still not exactly clear about:

- if combining the 2 tax bills reduces my tax credits normally applied to my PAYE job?

- how this would affect tax credits for me and the other half or if I can keep it seperate?

Any other pointers greatly appreciated
Thanks

Mr. Incognito

Setting up a company means that you are oblidged to register as a self employed person. Your company losses are ringfenced to the company and cannot be offset against PAYE tax credits.

Denalihighway

I was told by an accountant that losses of a sole trader can be offset against PAYE income...maybe I misunderstood what he meant by that? Or maybe he's wrong?

mathepac

Denalihighway wrote: »

I was told by an accountant that losses of a sole trader can be offset against PAYE income...maybe I misunderstood what he meant by that? Or maybe he's wrong?

Your accountant is correct, but the thread tile specifically refers to a "company loss" which is where the confusion is arising I think.

As a sole-trader there is no separate corporate entity or "company", just you the sole-trader / tax-payer.

When you say "the other half" are you married?

Denalihighway

yes I'm married, sorry, should have been clearer...I did say it would be sole trader but shouldn't have used the 'c' word in the title

derand

Be careful here. depending on the nature of the loss Revenue may not accept that you are carrying on a trade and could disallow the loss claim.