Losses

You can be trading yet make losses rather than a profit. If so, any trading losses you make may be available to set off against your other income. But you must bear in mind that:

• the intention to make a profit is one sign that you may be trading
• loss-making may indicate that you are not trading.

Therefore if you are merely involved in a hobby and you make a loss, the loss is not available to set against other income. Only trading losses are available to set off against other income.

If you dispose of an asset and it is worth less than it cost, you may have a capital loss. A capital loss may be allowable against chargeable gains on other assets. A loss will not normally be allowable if it arises on an asset that is exempt from CGT.