I am a sole trader and have unfortunately made losses in previous years from trading and anticipate further losses in this current year of trading. If I set up a limited company in the same field, can I use the losses from the current year and previous years to minimise my tax bill from my new company? 

Arthur replies: 

You cannot simply transfer your sole trader losses to the new limited company. However, under certain conditions, you can claim pre-incorporation loss relief: (1) The business must be transferred to the company, not simply a similar business started anew. (2) Payment for the trade must be made wholly or mainly in shares (i.e., you receive company shares in return). (3) You must still own those shares to claim relief. (4) The incorporated company must carry on the same trade. When these criteria are met, unused trading losses from your sole trader business can be offset against income you receive from the new company, like salary or dividends. In a First-tier Tribunal decision, HMRC challenged a claim because the sole trader had continued trading after forming the limited company (suggesting the business was not transferred); see Graham Davis v HMRC [2022] UKFTT 274 (TC).