One of many measures introduced by the Chancellor in yesterday’s Budget to assist business that may have suffered economic hardship resulting from the Coronavirus pandemic is a temporary extension to carry back trading losses for corporation tax and income tax.
Losses incurred in an accounting period ending between 1 April 2020 and 31 March 2022 for companies and in the tax years 2020/21 or 2021/22 for unincorporated businesses will be temporarily able to be carried back three years rather than one year.
This will provide cashflow benefits to affected business by allowing additional relief for trading losses, thereby generating repayments for tax paid in those earlier two years.
A £2m cap will apply to the extended carry back.
If you’ve already filed your company tax return for an accounting period ending after 1 April 2020, it might be worth revisiting it to see if you can also take advantage of this additional loss relief available.
Please contact us if you would like further advice on this or any of the Budget announcements.