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What is a Tax Rebate, and How Do I Claim it?

Corporation Tax
What is a Tax Rebate, and How Do I Claim it?
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Have you ever paid more corporation tax than you owe? Whether it was due to carrying back losses, not making tax relief claims, or more - here's how to claim it back!

Every year, whether you are a person or own a company, you are typically required to complete a tax return and then pay the amount of tax you owe to HMRC. Sometimes, a company may overpay their corporation tax and require a repayment, which is likely when carrying back losses or when forgetting to include any deductions, allowances, or tax relief schemes in your corporation tax return for the period.

So, what is a Tax Rebate?

To put it simply, a tax rebate is a refund of tax which is owed to the taxpayer or company by HMRC when they have paid more tax than they owe. You can also receive payments from HMRC if you have claimed tax credits from one of the tax relief schemes and it has created a loss for your company.


There are several reasons why a company may need to claim a repayment of tax from HMRC:

1. Trading Losses

In your CT600 (corporation tax) return, you can carry back any losses that your company made in the previous period to offset the amount of corporation tax which was due.

For example, if you had £3,000 of turnover and £2,000 of operating costs for the accounting period covering 2021/2022, then you would have made a profit of £1,000. As the tax rate for micro companies during that period was 19%, the corporation tax you would have been required to pay was £190.


However, if you then have £2,000 of turnover from trade, and £3,000 of operating costs in the accounting period covering 2022/2023, then you would have had a loss of £1,000, meaning there would be no corporation tax to pay.


You could actually carry back your losses from 2022/2023 to 2021/2022 and use them in that period to offset your taxable income and reduce the corporation tax due. To carry back losses, you will need to enter the amount of losses you wish to carry forward in section 160, in the box 'Losses carried back to previous period'.

After filing the 2021/2022 corporation tax return, your company would have been required to pay £190 of corporation tax, however, after carrying back the losses of £1,000, the tax due would be £0:



You would need to submit an amendment of your CT600 return for the accounting period covering 2021/2022 to reflect this change and reduce the corporation tax due to £0. In your amended filing, you would need to enter the amount of losses carried back to the accounting period (which in this case would be £1,000) into the box 'Losses brought back from later period', and then in order to use them in that period to offset the taxable income, you would need to enter that same amount in box 'Losses Used in this Period'.

This would mean that you are owed a repayment of £190 by HMRC. Please remember that if you are submitting an amendment, you will need to switch box 38 to Yes on the Return Information page of your CT600 return.

When carrying back losses, it is important to note that you can only carry back losses 1 year. Additionally, you can only file electronic amendments of your returns to HMRC up to two years after the end of the accounting period.


2. Allowances
If you have forgotten to claim capital allowances, or deductions and reliefs, etc., which would reduce the amount of tax you were due to pay, then you can file an amendment of your CT600 return to HMRC and request a repayment. Here is an example of a tax reduction from claiming capital allowances.

If your company had originally made a profit of £2,500, you would have had a tax payable amount of £475.

If your company had a total turnover from trade of £5,000 and total operating expenses of £2,500, then the taxable profit would have been £2,500, meaning that the corporation tax due to pay would be £475.