Effectively managing periods of trading difficulties can turn challenging circumstances into financial wins.
However, many businesses remain unsure how to fully make the most of Corporation Tax relief.
Precisely identifying your losses
Initially, clarify exactly what constitutes a trading loss. Capital allowances can increase your allowable loss, while balancing charges lower it.
Remember, disposals of assets are not classified as trading losses.
Instant advantages – reducing current tax liabilities
Claiming trading losses against current profits quickly eases cash flow constraints.
Timely reporting in your Company Tax Return ensures immediate financial relief and better cash availability.
Retrospective relief – recovering past Corporation Tax payments
Businesses experiencing recent losses can reclaim Corporation Tax already paid by offsetting current losses against profits from the previous year.
Careful apportionment of losses across multiple accounting periods maximises repayment opportunities.
Proactive financial management – future profit optimisation
Although carrying losses forward is common, stricter rules since 2017 limit relief to £5 million plus half of additional profits.
This emphasises careful forward-looking financial strategies to ensure relief isn’t missed.
The advantages of a corporate group structure
Being part of a corporate group can improve your Corporation Tax relief, allowing losses to offset profits among related businesses.
Structuring your companies strategically optimises overall financial performance.
Avoid common errors like missed deadlines or incomplete documentation.