The recent rise in employers’ National Insurance Contributions (NICs) to 15 per cent will result in a 60 per cent increase in NIC costs for a business employing staff on minimum wage, according to the Centre for Policy Studies.
With no new business reliefs announced in the Spring Statement and prices continuing to rise, many businesses could face growing losses.
With this in mind, it is important to consider the use of any tax reliefs that are available in relation to your losses.
Trading losses
If your business makes a loss from trading, on the disposal of a capital asset, or on property income, then you may be able to claim relief from Corporation Tax by offsetting your loss against income from the same tax year.
You can also offset losses against capital gains you have made in the same tax year, but this may only be done after you have offset losses against your income first.
If you make a trading loss and it cannot be used in the same year, you may be able to carry it back to earlier accounting periods.
Losses on qualifying shareholdings
You may also be able to offset losses against your income, that have been made as a result of holding shares in an eligible business that has failed.
This means you could receive tax relief of up to 45 per cent on your loss. However, you need to make sure that your loss meets the strict conditions required by HM Revenue & Customs (HMRC), as not all losses are eligible for tax relief.
Business closure
No one wants to be forced to close their business but, unfortunately, higher employment costs may mean that some businesses are simply unable to continue.
If you make a loss in your final 12 months of trading, you can also offset this against your profits from the previous three tax years to minimise your liabilities.
Mitigate your losses with our tax team
Business owners need to make the most of the tax reliefs available to them, including those related to losses.
Our tax advisors can help you to claim tax relief on losses, where you are eligible to do so, and to recover much-needed funds as a result.
Need help claiming tax relief on losses? Contact our tax specialists today.
