According to recent figures, businesses claimed back £11.5bn of overpaid tax from HMRC last year, up 26% from the year before. This figure is expected to be even higher in the current year once the effects of the pandemic have hit home and businesses claim the losses when filing their tax returns.  

The increase in tax reclaims is also partly due to a change in the loss carry back rules.

In this year’s Budget, the 12 month loss carry back claim was temporarily extended to 36 months, aligning it with the current terminal loss relief provisions.

This temporary extension applies to periods ending between 1 April 2020 and 31 March 2022 for corporates. Sole traders should look at losses in 2020/21 and carry back 3 years.

In addition to this, it was announced that unincorporated businesses and companies that are not members of a group can relive up to £2m in losses in each of the years 2020/21 & 2021/22.

In corporate group situations, each member will be able to claim up to £200,000 of loss relief in both these periods, unrestricted by group limitations. Group restrictions will give an overall loss relief limit of £2 million as a cap across the group, which is similar to provisions we currently in place albeit higher at £5,000,000.

We can help you to understand the loss relief rules and how they could benefit your business. This is a frequently changing area and careful planning is advised in order to submit a successful claim.

Please contact Curo tax partner and chartered tax advisor Julia Gallagher who can discuss your business requirements in detail and advise accordingly on optimising the tax position.

Read more about Curo’s tax services here and the various ways in which we advise and support businesses and individuals. Or call us on 01527 558539.