Many businesses have made losses during the Covid-19 pandemic. Normally trading losses can be carried back one year to set against profits and generate a repayment of tax.
The Government have announced that they will permit businesses to carry back losses for up to three years.
Companies that make losses in accounting periods ending between 1 April 2020 and 31 March 2022 will be able to carry back up to £2 million of extra losses for three years with the normal unlimited carry back for one year followed by the additional £2 million to the two preceding years.
Unincorporated businesses will be able to carry back losses made in the tax years 2020-21 and 2021-22 for three years, setting the loss against the profits of the latest year first. For example, a business which made a loss in 2020-21 can carry that loss back against its profits made in 2019-20, 2018-19 and 2017-18, setting off the loss against the profits of 2019-20 first, before setting the loss against the two earlier years.
Talk to us about your trading results from the pandemic period. If you have made a loss, taking action now could generate a useful tax repayment.