Many businesses throughout the UK are more then likely to make losses in the 2020-21 tax year due to the COVID-19 pandemic. Which was why the announcement in the March Budget that losses can be carried back for an extended period was most welcome.
The policy aims to provide a cash flow benefit to businesses by providing additional relief for trading losses, thereby generating repayments for tax paid for two additional years. Businesses looking to improve their cash flow can also make use of
Cloud accounting for their cash flow planning.
Legislation will be introduced in Finance Bill 2021 to extend the period for which trading losses can be carried back against previous profits. This extension will apply to trading losses made by companies in accounting periods ending between 1 April 2020 and 31 March 2022 and to trading losses made by
unincorporated businesses in tax years 2020-21 and 2021-22.
To facilitate this change, trade losses carry back will be extended from the current one year entitlement to a period of three years, with losses being carried back against later years first.
Businesses looking for advice or assistance on how to get back on track can contact one of Moore (South)’s trusted business advisers here: Moore (South) Contact Form