Remember when a carry-back felt so good? Well thanks to Mr Sunak you can do it all over again.

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Businesses have weathered quite a storm in recent years, not least the impact of Covid-19. Now, where lockdown has adversely affected profits and pushed profitable businesses into a loss-making position, there's an extension to the period over which they may carry-back trading losses, up to 3 years, from the current 1 year entitlement. In this way, businesses can gain relief against profits of earlier years, to get a repayment of the tax paid. And they have the choice to carry-back all or part of a tax loss from that income year.

Crucially, a loss carry-back can be used to increase cash flow, bringing forward the cash flow benefit of the losses, rather than having to wait until the company makes taxable profits in future years.

So, for company trading losses in accounting periods ending in the period 1st April 2020 to 31st March 2022, the amount of trading losses which can be carried back to the preceding year remains unlimited. After carry-back to the preceding year, a maximum of £2,000,000 of unused losses will be available for carry-back against profits of the same trade in the previous 2 years. This £2,000,000 limit applies separately to the unused losses of each 12 month period within the two year period ending 31st March 2022.

For the self-employed, trade loss carry-back will also be extended from the current one year entitlement to a period of 3 years, with losses being carried back against later years first. This relates to trading losses made by unincorporated businesses in tax years 2020/2021 and 2021/2022.

For more information related to your own specific circumstances, call GSM on 020 7935 3793 for a no-obligation meeting with one of our partners. It just might prove to be a weight off your shoulders.