Under the normal loss rules for companies, the loss could be offset against other income in the same year, carried back a year or carried forward against future profits.
But temporary rules were announced in the Budget 2021 due to Covid-19 which means that instead of only being able to carry a trading loss back one year for a continuing business you can now carry it back up to three years if the accounting period in which the loss arises falls between 1st April 2020 and 31st March 2022.
So, if your business has made profits in any of the three preceding years you may be able to carry that £10,000 of losses back to generate a tax refund.
Certain rules are in place where the amount of losses that can be carried back are capped and there are different rules for losses created prior to 1st April 2017 so advice should be sought to ensure the loss is being dealt with correctly and in the most tax efficient way.
If you would like any advice or assistance in this area please contact us on 0800 0523 555 or use our simple online contact form to arrange a free initial consultation.
Date published 17 Dec 2021This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.