UK Budget 2021 - extended loss carry-back for businesses

Mar 08, 2021

A recommendation of this Institute in its July 2020 The Next Financial Year position paper, the trading loss carry-back rule will be temporarily extended from the existing one year period to three years. This will allow for much earlier recognition and relief for losses and improved cash flow position with tax refunds.

The extended carry-back will be available to both companies and unincorporated businesses as follows:-

  • Unincorporated businesses and companies that are not members of a corporate group will be able to obtain relief for up to £2 million 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 £2 million of losses in each of 2020/21 and 2021/22, but subject to a £2 million cap across the group as a whole (currently the cap for such groups is £5 million).

More information is available in an accompanying policy paper.