Offsetting is a term used in tax world that refers to using losses or expenses to reduce the amount of tax an individual or business owes.
Offsetting is a tax term that refers to the process of using losses or expenses to the reduce the amount of Taxable Income an individual or business has. This means they have lower tax obligations.
There are several ways to carry out Offsetting. For example, an individual might have made a profit selling some property. This profit is eligible for Capital Gains tax if it is above the Capital Gains Tax Allowance. However, this individual might be able to use a Capital Loss that was made from selling property to offset the Capital Gain and reduce their tax liability.
Offsetting can also by done by Bringing Forward losses from the previous tax year.
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