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Autumn News
Loss And Profit
If you are currently making losses in your business, you can take advantage of the "carry back" rules which allow you to get back income or Corporation Tax you paid on past profits. Normally you can only carry a loss back to the previous year. For income tax traders with losses in 2008/09 or 2009/10, and for companies with losses in accounting periods ending between 24 November 2008 to 23 November 2010, the carry back is extended to 3 years - but only for the first £50,000 of the current loss.If you are currently making a loss which you expect to be able to carry back, you can defer the payment of the tax liability for the previous period - normally you would have to pay the tax and claim it back when you can produce the accounts to prove that you made the loss.
Bear in mind that the corporation tax rate on small company profits is due to go up from April 2010 to 22%. If you carry a loss back to 2006 you might only get relief at 19%, when it would be 22% going forward. However, 19% of a bird in the hand may be worth more than 22% of a bird in the bush!
If you are making losses and want to make sure you get the best relief for tax purposes, we can work out the numbers for you.