Yes, this measure will help all small businesses who make a loss in the 2008/09 tax year. The Pre Budget Report last month extended the current one year period for which current trading losses from businesses can be carried back against previous years profits for a period of three years, with losses being carried back against the later year first.
The proposal applies to losses arising in the 2008/09 tax year, and extends the loss relief available against general income so that any excess may be carried back against trading profits in the 2006/07 and 2005/06 tax years. There are other options available to you should you make a loss, so ensure you consider all of them carefully.
This measure is particularly welcome for small businesses such as yours that have been affected by the credit crunch in the current tax year. It will be especially beneficial if in the previous you were a higher rate taxpayer in the any of these years you can receive up to a 40% tax refund for the losses you have made in 2008/09.
It is best to seek professional advice from your local TaxAssist Accountant on the revisions introduced, as they can establish which loss relief claim is most tax efficient, and which option provides you with the greatest tax refund.
By Jo Nockels
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