Extended loss carry back for businesses

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

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Businesses incurring trading losses can benefit from a temporary extension to the loss carry back rules. The extension has been proposed for corporate and unincorporated businesses.

The construction industry is experiencing an increase in costs due to delays caused by COVID and an increase in the price of materials resulting from Brexit, therefore, increasing the likelihood of incurring such losses.

The rules apply to accounting periods ending between 1 April 2020 and 31 March 2022 and it means it will be possible to carry back relevant losses to set against profits incurred in the three years leading up to the period in which the loss is incurred, rather than the current one year rule.

Companies

The trading losses can be carried back against total profits of earlier accounting periods up to the capped amount of £2m per annum, per group.

Any stand-alone company or group company wishing to make a claim exceeding £200,000 will be required to make the claim in their company tax return.

Unincorporated businesses

The proposed extension will build on the existing trade loss relief against general income rules.

The time limit for making a claim for the extended relief for trade losses is:

  • Tax year 2020 to 2021 – deadline 31 January 2023.
  • Tax year 2021 to 2022 – deadline 31 January 2024.

Please contact us if you have questions about whether you can benefit from the extension.

Do you need extra information?
Natasha Heron

Natasha is a member of the ICAEW as a qualified auditor and the Chartered Institute of Taxation, specialising in indirect taxes. Natasha has developed a specialism as an adviser on the Stamp Duty Land Tax implications of property transactions.

Contact Natasha at Natasha.Heron@hhllp.co.uk or on 01923 634460