| Under current rules
businesses already have a number of
mechanisms to relieve trading losses
against other income including past
trading profits. Unincorporated
businesses can offset unlimited
trading losses against income in the
preceding year and in the early years
of business trading losses may be
carried back for three years.
The main relief for companies is a
carry back of unlimited trading losses
against profits made in the previous
year.
A proposed revision will apply for
two years and will extend the period
that current trading losses from
businesses can be carried back against
previous profits to a period of three
years, with losses being carried back
against later years first.
The amount of losses that can be
carried back to the preceding year
remains unlimited. After carry back to
the preceding year, a maximum of
£50,000 of the balance of unused
losses is then available for carry
back to the earlier two years.
This change will have effect for
company accounting periods ending in
the period 24 November 2008 to 23
November 2010. For unincorporated
businesses, the measure will have
effect in relation to trading losses
for tax years 2008/09 and 2009/10.
Internet link:
HMRC budget note 13 |
