Carry-Back Relief: Claiming Current Losses Against the Previous Year

Key steps and distinctions

Qualifying deductions comprise current-year unabsorbed capital allowances and trade losses, with allowances used first. Donations are not included in this carry-back definition. Capital allowances require the same business to have operated in the year against which they are used: first-period business allowances cannot be carried back, although first-period trade losses may qualify. Companies must also meet the shareholding test at the separate dates prescribed for allowances and losses; at least 50% of the shareholdings must remain with the same persons. Loss items transferred under group relief are dealt with before the company’s carry-back election. The election is irrevocable. Companies elect by the time they file the current-year return, use Form C rather than Form C-S and separately submit the revised preceding-year computation through the designated document service. Individuals may elect no later than thirty days after service of the current-year assessment; partners need the partnership accounts and allocation submitted by the precedent partner. Any refund is net of outstanding tax liabilities. The three-year enhanced system and estimated-loss election described for YA 2020 and 2021 are historical exceptions, not the ordinary current one-year entitlement.