Carry back of trading losses
The measure
As previously announced in the Pre-Budget Report, companies and unincorporated businesses making trading losses will be able to carry back £50,000 for up to three years (taking later years first). The remainder of any tax loses will continue to be available to carry back for one year and remains unlimited.
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 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.
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.
