Offsetting basically means balancing money that you are owed with the money that you owe. For example, if HMRC allows you to do so, they sometimes let you offset taxes you owe them with tax rebates they owe you.
Offsetting can also be used to describe a similar process in business when a contact of yours is both a supplier and a customer. You can offset the invoice you owe them from the invoice they owe you.
If you’re trying to understand offsetting, then it’s important to know that it can mean a few different things when it comes to tax. This includes:
We understand that first starting out in the world of self-employment can be overwhelming and offsetting can become complicated. Contact our team today for comprehensive guidance and support to get your accounts in order and ready for your Self Assessment tax return.
In the UK, you must keep your tax records for at least six years from the end of the relevant tax year. Accounting software can help you to digitally store your records without taking up space in your office!