In his Spring Budget the Chancellor announced a temporary three year carry back of trading losses for limited companies and unincorporated traders instead of the normal one year carry back.
This will potentially allow loss making businesses to obtain a refund of tax paid in those years.
The latest Finance Bill includes the legislation to implement these changes and HMRC have recently issued guidance on how the rules operate.
For unincorporated businesses, the extension applies to a maximum £2,000,000 of unused trading losses made in each of the tax years 2020/21 and 2021/22.
For corporation tax the new rules apply to accounting periods ending between April 1, 2020 and March 31, 2021.
The £2,000,000 maximum applies separately to unused trading losses made by companies, after carry-back to the preceding year.
The £2,000,000 cap is subject to a group-level limit, requiring groups with companies that have capacity to carry back losses in excess of £200,000 to apportion the cap between member companies.
Ellis & Co Chartered Accountants and Business Advisers, Chester & Wrexham - 01244 343504, firstname.lastname@example.org