Tax relief for loss-making firms should go 'further'

Once profitable businesses that are now suffering losses as a result of the recession were offered some relief in the Chancellor’s Budget.

The carry-back scheme enables businesses to reclaim taxes on profits that have been made in the last three years by carrying back losses up to the sum of £50,000.

Originally announced in the pre-Budget report, the scheme has now been extended until November 2010 (from 24 November for companies and for the 2008/09 and 2009/10 tax years for unincorporated businesses).

It has been estimated by the Treasury that the measure could be of help to some 140,000 smaller firms, each being able to claim an average of £4,000.

While welcoming the extension, one business group argued that the Chancellor should have gone further.

David Frost, the director general of the British Chambers of Commerce, said: “The extension to loss carry-back will help with smaller business cash-flow. But the Chancellor may have considered increasing the £50,000 carry-back limit to really make a difference.”