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30 January 2012

Can I offset losses against business profit I made this year?

I have been trading as a sole trader for 4 years now. The first 3 years I always made a financial loss totalling £12,000. (Yr 1: £7,000, Yr 2: £3,000, Yr 3: £2,000). This year I have made a profit of £4,000. Can I offset the losses incurred in previous years against this years' profit to reduce my tax liability to nil? If so, will I be able to do the same next year with the remaining £8,000 (assuming I make a profit)?

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