Extended Loss Relief For Unincorporated Businesses

Chris Stedman
Senior Partner
October 18, 2021

Part of the government’s Covid measures include relief for unincorporated businesses that incurred losses as a result of the pandemic. Note this only applies to the self employed and to partnerships for the two years 2020/21 and 2021/22. No one likes losses. The best one can do is find a way in which these can be relieved against other profits and/or other income. But the path is narrow and requires careful attention.

Sideways Loss Relief

This relief is the normal route to take with losses. The losses can be claimed against other income in the year of loss or against general income (trading profits and other income) in the previous tax year.

Note there must be a sideways loss claim in either or both of 2020/21 or 2019/20 for extended loss claims to qualify.

Extended Loss Relief

If there are still unrelieved losses after a sideways claim then further relief can be achieved against profits in the two previous years, always taking the last year first.


Adam was hit badly by Covid. His trading results for the last four years were as follows:

Year Ended 31st March 2021 (120,000)
Year Ended 31st March 2020 40,000
Year Ended 31st March 2019 30,000
Year Ended 31st March 2018 50,000

Total Income in each of these years was:

  Profits Rent Dividends Total
2020/21 9,000 4,500 13,500
2019/20 40,000 8,500 5,000 53,500
2018/19 30,000 8,500 5,000 43,500
2017/18 50,000 8,000 5,000 63,000

Adam makes no sideways claim for 2020/21 because other income is already covered by personal/dividend allowances.

However, he makes a sideways claim for 2019/20 which looks like this:

Loss Available   (120,000)
Trading Profits 40,000  
Other income 13,500  
Sideways Loss (53,500) 53,500
  £           -                
     £  (66,500)

Having made a sideways loss claim, Adam can now make an extended loss relief claim for 2018/19:

Loss Available   (66,500)
Trading Profits 30,000  
Extended Loss Relief (30,000) 30,000
             £         -  
Rent 8,500  
Dividends    5,000  
Reduced Loss    £  (36,500)


As there are still losses available, Adam can make yet another claim for 2017/18:

Loss Available   (36,500)
Trading Profits 50,000  
Extended Loss Relief (36,500) 36,500
Rent 8,000  
Dividends    5,000  
Balance of Losses    £         -

Two points to note:

a)      Extended losses can only be set against trading profits in 2018/19 and 2017/18

b)      Had there been some unutilized losses in 2017/18 these could then be carried forward to the year 2021/22

Extended loss relief is a temporary relief to cope with Covid problems. The relief only applies to losses arising in the years 2020/21 and 2021/22.

Need help? Contact C&H Stedman.

Subscribe to Steddi Updates

Get industry insights that you won't delete, straight to your inbox.
We use contact information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time. For information, check out our Privacy Policy.

More news


Inheritance Tax - Loan Waivers

It is not uncommon for moderately well-off parents to help their children with loans (particularly in connection with the acquisition of property) which later on in life they proceed to convert to gifts when their own circumstances are assured. What documentation is necessary? Do you really need to bother?

Read Article

Tax Chat #2

Many clients sensibly set up a direct debit for payment of VAT which not only gives a few days extra to pay VAT but also ensures HMRC receive your payment on time, we at C&H Stedman always recommend this.

Read Article

Tax Chat #1

There is currently a lot of activity and hype about the 130% super-deduction for companies that ends on 31 March 2023, you may be being encouraged to take advantage of it while it is there or thinking of bringing capital expenditure forward to take advantage of it.

Read Article