Tax losses can arise due to a difficult trading period. They can also be created if you invest in qualifying equipment and you are able to set this cost against your trading profits – if the cost of the assets exceeds your profits you will have a tax loss.

There are three ways you can utilise these losses:

1. Against income or possibly against capital gains of the same year or an earlier year.
2. Against profit of the same trade.
3. Against income from a company to which you transferred your trade.

Not all losses may be claimed in these ways and sometimes the amount of loss you claim is restricted or limited. Loss relief is one of the reliefs where there is a limit, it is the higher of £50,000 and 25% of the adjusted total income of the year. HS227 Losses (2017)

Additionally, the amount of loss relief you claim against income or capital gains may be restricted or limited for example if you:

1. have worked for less than 10 hours a week on average on commercial activities of the trade,
2. are a Limited Partner or a member of a Limited Liability Partnership,
3. have a trade which is carried out wholly overseas,
4. have claimed certain capital allowances,
5. have income from oil extraction activities or oil rights.

You can also claim relief for losses in the final 12 months of the trade, against profits in the trade during the three previous years.

Another key planning objective when considering the best way to use losses is to aim to reduce your income, and therefore tax liability, in a year when tax was paid. In this way, the loss relief claim will result in a tax refund.

Calculation and utilisation of losses is not a simple matter. As discussed above, the aim should be converting the loss into a cash flow boost – a tax refund. We would be happy to discuss your options.

Most of us are aware that we pay Stamp Duty Land Tax (SDLT), or the regional equivalents, when we buy a property, but that is just the tip of the iceberg. For example, if you give something of value in exchange for land or property, it will also count towards the chargeable consideration and therefore the amount of SDLT payable.

As well as money, you can exchange property for: goods, works or services, release from a debt, or transfer of (taking on) a debt. Another example where a mix of money and other consideration is taken into account is when two people, who own a house together, then split up and one pays the other for their share of the equity and also takes on their outstanding mortgage liability.

The chargeable consideration includes anything paid for assets that form part of the land or property. These can include:

• buildings and structures that are part of the land, for example farm buildings

• fixtures and fittings, including bathroom and kitchen fittings

• intangible assets, for example the value of goodwill attached to the land

• the estimated value of a commitment to do work or services, for example a promise from the seller to repair the property.

• any VAT you pay on the transaction.

Chargeable consideration does not include carpets, curtains, free-standing furniture or other household consumables. When the sale price includes a payment for items that aren’t part of the chargeable consideration, they must be valued at a rate reflecting their fair market value.

For example, if the seller includes carpets in the sale, the buyer and seller must agree a fair price bearing in mind their age and quality. Subtract this from the price paid to find the chargeable consideration.

The Government has published the long-awaited Data Protection Bill that will incorporate most of the provisions set out in the EU General Data Protection Regulation. This will apply from 25 May 2018, and many businesses will need to update their data security arrangements to comply with the new regulations.

• The Bill will introduce safeguards to prevent and detect fraud, protect the freedom of the press, allow scientific research and maintain the integrity of professional sports
• Specifically include measures to allow action against terrorist financing, money laundering and child abuse
• Processing done for legitimate interests will be allowed if it achieves a balance with individuals’ rights

With individual data rights being strengthened, it is the Government’s view that, as far as possible, existing lawful data processing should be allowed to continue. Consequently, the Bill assures specific UK businesses and organisations the vital data processing they undertake for legal or public interest reasons can continue uninterrupted.

It will preserve existing tailored exemptions that have worked well in the Data Protection Act 1998, carrying them over to the new law.

The Bill will include exemptions for data processing in the following areas:

• Processing of personal data by journalists for freedom of expression and to expose wrongdoing is to be safeguarded
• Scientific and historical research organisations such as museums and universities will be exempt from certain obligations which would impair their core functions
• National bodies responsible for the fight against doping in sport will continue to be able to process data to catch drug cheats
• In the financial services sector, the pricing of risk or data processing done on suspicion of terrorist financing or money laundering will be protected
• Where it is justified, the Bill will allow the processing of sensitive and criminal conviction data without consent, including to allow employers to fulfil obligations of employment law

Under the new regulations individuals will have more control over their data by having the right to request that their personal data be erased. This will also mean that people can ask social media channels to delete information they posted in their childhood. The reliance on default opt-out or pre-selected ‘tick boxes’, which are largely ignored, to give consent for organisations to collect personal data will also become a thing of the past.

Businesses will be supported to ensure they are able to manage and secure data properly. The data protection regulator, the Information Commissioner’s Office (ICO), will be given more power to defend consumer interests and issue higher fines, of up to £17 million or 4 per cent of global turnover, in cases of the most serious data breaches.

Data protection rules will also be made clearer for those who handle data but they will be made more accountable for the data they process with the priority on personal privacy rights.

If you are employed, and this will include most directors, you can claim for expenses that you have paid for personally, to be set against your income liabilities for the relevant tax year.

You must keep records of the amount you have spent and make a claim to HMRC within four years of the end of the tax year that you spent the money.

For every £100 of expenses that you can claim you will receive a refund of:

• £20 if you are a basic rate taxpayer,
• £40 if you are a higher rate taxpayer, and
• £45 if you are a higher rate tax payer.

What qualifies for tax relief?

1. Uniforms, work clothing and tools
2. Business mileage claim for use of your own car on company business (does not include home to work journeys)
3. Other travel and overnight costs
4. Professional fees required by your employment
5. Certain costs for working from home
6. Buying work related equipment
7. Any other expenditure you have incurred for work purposes only

You can’t make a claim if these costs have been reimbursed by your employer.

For claims more than £2,500 you will need to submit on a self-assessment tax return.

For claims less than £2,500 you have three choices:

1. If you already complete a self-assessment tax return use this to make the claim.
2. Complete a form P87 and file online or by post.
3. You make a claim by phone if you have made a successful claim in previous years and your expenses are less than £1,000 (or £2,500 for professional fees and subscriptions).

If your employer gives you a contribution towards any of these expenses, but does not cover the full cost, claim the difference.

And finally, if you make a claim you will only receive a tax refund if you have paid tax in the relevant tax year.

We are often asked by landlord clients to clarify the difference between a replacement item of furniture, furnishing, household appliances or kitchen ware, and a purchase that may be considered an improvement. The difference is critical, as from April 2016, the 10% wear and tear allowance was scrapped and the new Domestic Items Relief (DIR) introduced. To qualify for the DIR the following points need to be considered:

• Unlike the Wear and Tear allowance, for the Replacement of Domestic Items relief to apply the dwelling house can be unfurnished, part furnished or fully furnished.

• An expense must be incurred on purchasing a replacement domestic item, ‘the new item’.

• The new item must also be solely provided for use by the tenants in a dwelling house and the old item must no longer be available for use in that dwelling house.

• The initial cost of purchasing domestic items for a dwelling house isn’t a deductible expense so no relief is available for these costs. Relief is only available for the replacement item.

It is then necessary to consider if the new item is an improvement of the replaced item. HMRC have outlined the following points:

• If a new sofa would have cost you £400 but a sofa bed cost you £550, you could only claim the £400 as a deduction and no relief is available for the £150 difference.

• When considering if the new item is an improvement on the old asset, the test is whether the replacement item is or isn’t, the same or substantially the same as the old item.

• Changing the functionally (from a sofa to a sofa bed for example) means the replacement isn’t substantially the same as the old item.

• If you later purchase a replacement sofa bed for use in that dwelling house, you would be able to claim the full cost of this new sofa bed. This is if there was no improvement on the old sofa bed and the old sofa bed is no longer available for use in that dwelling house.

• Changing the material or quality of the item also means the replacement isn’t substantially the same as the old item. If you upgrade from synthetic fabric carpets to woollen carpets, the replacement isn’t substantially the same as the old item so there has been an improvement.

• If the replacement item is a reasonable modern equivalent, for example a fridge with improved energy efficient rating compared to the old fridge, this isn’t considered to be an improvement and the full cost of the new item is eligible for relief.

One final point. When you first purchase a property to let, make sure that a figure is included in the contract to cover any domestic items included. In this way, when you replace these items at a future date you will be able to claim the DIR.