CTM04505 | Corporation Tax: trading losses - relief against total profits: introduction
From HM Revenue & Customs · Company Taxation Manual
Relief for a company’s trading losses against other profits is at . For other ways of giving relief for losses see .
A company can claim to set off trading losses against its total profits:
of the accounting period in which the loss was incurred, and
if the claim requires, to carry back the losses against profits of preceding accounting periods ().
So far as possible claims should be made in the company’s CTSA return ( onwards). For claims see and for accepting a late claim see .
Relief is given against total profits, including chargeable gains. A company cannot choose to restrict the claim to cover only specific items of income or gains.
A claim may be made to:
only to set-off losses against profits of the current accounting period, or
set off losses against profits of the current period, and then carry back any remaining unused losses against profits of preceding accounting periods.
A company cannot claim to carry back losses without first setting them off against profits of the current period.
A company must offset as much of the loss as possible against profits of the previous 12 months. The amount used should be the lesser of:
the total losses available for relief, or
the total profits of that 12-month period.
Any remaining losses are carried forward for relief in future accouting periods.
Example
A company makes trading losses of £15,000 in its 12-month accounting period ending 30 November 2024. It makes a claim for relief to offset the losses against profits of £10,000 in its previous 12-month accounting period ending 30 November 2023. The remaining £5,000 losses are then carried forward for future relief.
Losses of an earlier accounting period, where these are claimed, are relieved before losses of a later accounting period. There is an example at .
See onwards about the disallowance of trading losses carried back under where there has been a change in ownership of a company ().
See for guidance on the set-off of deficiencies of trade protection associations for earlier years.