CRW Accountants

The Mews, Queen Street
Colyton, Devon, EX24 6JU
This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel: 01297 553286

Search News


Terminal losses for the self-employed

Source: HM Revenue & Customs | | 22/08/2017

There are a number of different reliefs available to the self-employed or members of a trading partnership that suffer tax losses, and a number of ways these losses can be used.

One commonly used relief, is terminal loss relief. This relief is available to businesses that suffer a loss in the last year of trade. Terminal loss relief allows for the carry back of any trading losses that occur in the final 12 months of trading to be set off against profits made in any or all of the previous three tax years.

Terminal loss relief can only be offset against the profits of the same trade. Any loss must be offset first against the profits of most recent years before being carried back to earlier years, this is commonly known as the LIFO (last in, first out) basis. A claim needs to be made within four years from the end of the tax year in which the business ceases, for the 2016-17 tax year, the time limit for making a claim is 5 April 2021.

Planning note:

Using terminal loss relief can help you recover any drain of cash flow occasioned by the final year's trading losses, as any carry back of losses should trigger tax refunds for those earlier years. If Income Tax was paid at higher rates, 40% or more of losses can be recovered in this way. Claims need to be carefully considered in order to maximise these benefits.

Latest News

  • Responding to a County Court claim

    15/05/2018 - More...

    It is important that any correspondence received from the County Court is dealt with promptly. This should include taking proper legal advice when appropriate. Usually, a

  • When might you be due a tax refund?

    15/05/2018 - More...

    HMRC has issued helpful guidance that explains when you might be due a tax refund and how to make a claim. According to HMRC you may be able to claim a refund if you: are

  • NMW and LW enforcement measures

    15/05/2018 - More...

    A new press release has revealed that in 2017-18, HMRC investigators identified £15.6 million in back pay that is owed to over 200,000 of the UK’s lowest paid workers. This was an

 

 

           

Copyright © 2018 - CRW Accountants

designed by Zoe Adele Parsons MA

Cookie Policy