The short version: Offsetting means using losses or credits to reduce what you owe. If you made a loss on one thing and a profit on another, you might be able to offset them so you only pay tax on the net result.
Common examples
Capital losses can offset capital gains. If you sold two investments and made £5,000 profit on one but £3,000 loss on the other, you only pay CGT on the net £2,000 gain.
Trading losses can sometimes offset other income. If your business made a loss, you might be able to use it against your employment income.
Are there limits?
Yes. Different types of losses can only offset certain types of gains or income. Some losses can be carried forward to future years. The rules are specific and sometimes complex.
Why does it matter?
Offsetting reduces your tax bill legally. Knowing what you can offset and when helps you pay only what you genuinely owe.
Made losses and wondering if they can reduce your tax? We can work out what’s possible.
