Company trading loss relief (UK corporation tax)
A company with a trading loss may claim relief against total profits of the loss-making accounting period and, to the extent unused, against profits in the preceding 12 months, subject to the same-trade and other statutory conditions. It may instead or additionally carry eligible unused losses forward, subject to the rules applicable to their origin and use. Terminal trading losses have separate extended carry-back rules. Companies and individuals have different loss-relief regimes.
Worked example
A company makes a £40,000 trading loss in a 12-month accounting period and has £10,000 total profits of that period. Assume it claims current-period relief and has £50,000 eligible total profits in the immediately preceding 12 months from an accounting period in which the same trade was carried on. It uses £10,000 against current profits and claims the remaining £30,000 against the earlier eligible profits, leaving £20,000 of those profits before other adjustments.
Common mistake
Carrying a loss back before applying the claim to available current-period profits, or treating a company’s loss claim as identical to an individual trader’s.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |