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Unincorporated businesses and companies will welcome the increased flexibility to carry back losses arising during the period of the pandemic an additional two years. The extended relief will allow for a three year carry back of losses arising in 2020-21 and 2021-22.  Currently losses in an ongoing business can only be carried back twelve months.

Details are as follows:

  • Unincorporated businesses and companies that are not members of a corporate group will be able to obtain relief for up to £2m of losses in each of 2020-21 and 2021-22
  • Companies that are members of a corporate group will be able to obtain relief for up to £200,000 of losses in each of 2020-21 and 2021-22 without any group limitations
  • Companies that are members of a corporate group will be able to obtain relief for up to £2m of losses in each of 2020-21 and 2021-22, but subject to a £2m cap across the group as a whole.

This should mean that a company making losses in the year to 31 March 2021 would be able to set those losses against profits arising in the year ended 31 March 2018. This will provide some additional cash flow by accessing a repayment of previous tax payments

Having projected your business losses, seek advice today on the steps you can take to access early tax repayments.