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EXTENDED LOSS RELIEF




Claim deadlines for loss relief

Individuals and companies can both benefit from an extended carry back period for certain losses, which may be useful in generating a tax repayment. The extension only applies to losses incurred in a limited window. To take advantage of the extended carry-back rules, the relief must be claimed by the relevant deadline.


For income tax purposes, the extended carry-back is available for a 2020/21 loss or a 2021/22 loss. The loss for a tax year is the loss for an accounting period ending in that tax year. The extended carry back rules mean that in addition to the usual rules for relieving the loss against income of the same or a previous tax year, to the extent that any of the loss remains available, it can be carried back against profits of the same trade for two further years, setting the loss against the later of those years first.


The claim will normally be made in your self-assessment tax return. The deadline for making a claim for a loss in the 2020/21 tax year is 31 January 2023 and the deadline for making a claim for a loss in the 2021/22 tax year is 31 January 2024. However, where the claim affects more than one tax year, it can be made outside the tax return. When making the claim, the name of the business, the period for which the loss is made, the amount of the loss and how the loss is to be used should be specified.


For corporation tax purposes, a loss for an accounting period that ends between 1 April 2020 and 31 March 2022 benefits from the extended carry back. This enables the loss for the period to be carried back against profits of the same trade for the previous three years, rather than the previous year. The loss is set against the profits of a later year before those of an earlier year. The claim must be made within two years from the end of the accounting period in which the loss which is being carried back arose.


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