Maybe you’ve spent years in a well-paid job and as a result of a difficult couple of years, you’ve recently been made redundant. You’ve taken the plunge and decided to branch out on your own.
Did you know that:
- You might be able to deduct expenses incurred in the previous seven years which relate to your new business in your first accounting period?
- If your expenses exceed your income in any of the first four years of your new business, the trading loss can be carried back and deducted from income earned in the three years before the year of the loss. This could generate a welcome boost to your cash flow in the form of a tax refund.
- Alternatively, trading losses can be set against other income and capital gains in the same (or the previous) tax year.
- Did you know that losses can save you Class 4 National Insurance for more years than you think?
A temporary extension to loss relief claims for long-established businesses?
Established businesses – whether they are operating as companies, partnerships or sole traders who were very profitable but have struggled through the pandemic might be able to deduct trading losses generated in 2020/21 and the current tax year ending 5 April 2022 against trading profits as far back as 2017/18 to generate a much-welcomed tax refund.
If you have set up a new business in the last couple of years or you are an established business that has struggled through the pandemic, ask CKLG to help you prepare your 2021/22 Tax Return as soon as you can after 6 April 2022 to determine your trading loss and assess how to make the best use of it.
If you are concerned that you’ve not made the best use of your trading loss in your 2021 Tax Return, contact CKLG to discuss a remedy.
