The measure
As announced prior to the Budget statement, it has now been confirmed that companies and unincorporated businesses making trading losses will generally be able to carry back these losses for up to three years (taking later years first) rather than one year currently.
The one year loss carry back needs to be done first and will remain unlimited. After this, the carry back to the earlier two years will be capped at £50,000 per year.
Who will be affected?
Companies and unincorporated businesses with trading losses.
When?
For companies the new rules will apply from 22 April 2009 for accounting periods ending between 24 November 2008 and 23 November 2010, while for unincorporated businesses the new rules will apply in respect of trading losses for the 2008/09 and 2009/10 tax years.
Our view
This measure should provide welcome relief to businesses making losses in the current economic climate. However, the £50,000 limit will in practice restrict its benefit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.