I have a self-employment profit of £4,538 and pension received £9,305, giving total income of £13,843 (for 2019/20). I have available losses from the previous year of £4,127. Do I need to utilise whole loss in this year against the profit from self-employment, or can I use only £1,993 just to bring my taxable profit to nil (the rest would be covered by personal allowance of £11,850)? Can I carry forward the remaining loss of £2,134 to the next year?

Arthur Weller replies:
Please see HMRC’s Business Income manual at www.gov.uk/hmrc-internal-manuals/businessincome-manual/bim85060, where it states: ‘Such losses must be set off against the first year in which a profit arises and any balance must then be set off in the next tax year in which a profit arises.’ If profits arise, the loss must be used as far as possible, even if the result is that personal allowances are wasted.