Three main ways to use a loss
- Carry forward — set the loss against future profits, reducing Corporation Tax in the years ahead until it’s used up
- Set against other profits of the same accounting period (for example investment income or gains)
- Carry back 12 months — reduce the previous year’s profit and get a refund of tax already paid
There’s also terminal loss relief for a loss in a company’s final trading period, which can be carried back up to three years.
Carrying losses forward — more flexible than it used to be
For losses arising from April 2017, carried-forward trading losses can generally be set against the company’s total future profits, not just profits from the same trade. That flexibility means a loss-making year can shelter tax across a broader range of future income — a genuine, legitimate way to smooth tax over the ups and downs of a business.
Carrying back for a refund
A carry-back claim can turn a bad year into cash: set the loss against last year’s profit, and HMRC refunds the Corporation Tax you already paid on the amount now displaced. In a downturn that refund can matter a lot — but the claim must be made correctly and within the time limits.
File the return, even at a loss
You can’t use a loss you never recorded. If HMRC has issued a notice to file, you must submit the CT600 — and doing so establishes the loss so it can be carried forward or back. A loss year is the worst time to skip the return.
Make your losses work
We work out the most valuable use of a loss for your situation, make the claims properly, and chase any refund. Call 0114 327 1480.