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

  • 19-07-2010 10:45AM
    #1
    Denalihighway
    Registered Users, Registered Users 2 Posts: 1,079 ✭✭✭


    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


Comments

  • #2
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭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.


  • #3
    Denalihighway
    Registered Users, Registered Users 2 Posts: 1,079 ✭✭✭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?


  • #4
    mathepac
    Banned (with Prison Access) Posts: 4,990 ✭✭✭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?


  • #5
    Denalihighway
    Registered Users, Registered Users 2 Posts: 1,079 ✭✭✭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


  • #6
    derand
    Registered Users, Registered Users 2 Posts: 26 ✭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.


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