Sarah Bradford explains how the new rules that extend the period for which losses can be carried back might be used to generate a useful tax repayment.
Many businesses have, unfortunately, incurred losses because of the Covid-19 pandemic. Tax relief is already available for losses, and there are various ways in which losses can be relieved.
The options available for relieving a particular loss depend on a number of factors, such as: whether it is incurred by a company or an unincorporated business; for unincorporated businesses, whether the business prepares accounts on the accruals basis or the cash basis; and when in the business lifecycle the loss is incurred (with special rules applying to losses in the early years and to terminal losses).
However, there is now a ‘new kid on the block’, which extends the period for which