An extension to the trading loss carry-back rule and the super-deduction tax break illustrate the government’s push to stimulate business investment

Trading loss carry-back rule extension

The Chancellor confirmed in last week’s Budget that businesses will benefit from a three-year carry back of trading losses arising during the pandemic, an extension from the current one year entitlement.

The loss relief extension is set to provide vital cash flow to businesses that, pre-Covid, were consistently turning a profit and paying tax.

This extension will apply to trading losses made by companies in accounting periods ending between 1 April 2020 and 31 March 2022 and to trading losses made by unincorporated businesses in tax years 2020 to 2021 and 2021 to 2022.

Trade loss carry back will be extended from the current one year entitlement to a period of 3 years, with losses being carried back against later years first


The super-deduction tax break is a £25bn scheme with the intention of igniting investment by providing 25p off company tax bills for every pound of qualifying spending on plant and machinery.

The super-deduction offers businesses 130% first-year relief on qualifying main rate plant and machinery investments from 1 April 2021 until 31 March 2023.

The tax break is intended to incentivise business investment, aid post-pandemic economic recovery and give a boost to the UK’s productivity levels.

If you would like to discuss either of these tax incentives in the context of your own business, please get in touch with our Tax team.