Enterprise House, The Courtyard, Old Court House Road, Bromborough, Wirral, CH62 4UE
In George Osborne’s budget speech mention was made that they would be imposing a restriction on certain reliefs which are at present unlimited. One of those reliefs is loss relief.
It is proposed that this will in future be restricted to the greater of £50,000 or 25% of the taxable income.
Loss relief can often help businesses by enabling the owner to set losses off against other sources of income arising in the same year as the loss and thus reduce the tax liabilities on those other sources of income at the time when businesses need such a reduction most. In addition losses made in the early years can be carried back by the owner to set off against income in previous years and generate much needed refunds of tax to help cash flow in the early years. The imposition of these new rules could have a serious impact and thus forward planning or early action is required to make best use of losses in the light of the proposed changes.
Although this matter is still at the consultation stage, an initial indication of how this will operate has been issued and naturally things may change perhaps to provide an exception for new businesses. The measures, when enacted, are not due to come into effect until the 2013/14 income tax year.
LBW Chartered Accountants is the trading name of Jimalice Ltd, Company No 07105303. Company Registered in England & Wales Enterprise House, The Courtyard, Old Courthouse Road, Bromborough, Wirral, CH62 4UE