No. 18 · Limited companies · Corporation Tax
Company trading losses: an overview
A company’s trading loss can be set against its other profits of the same accounting period, carried back 12 months, carried forward, or surrendered to group companies. Claims are made by the company, mostly within two years.
On this page
- Current year and carry back: set the loss against the company’s total profits of the same period, then (if claimed) profits of the previous 12 months (CTA 2010 s37).
- In the final 12 months of a trade, the carry-back extends to 3 years.
- Losses from 1 April 2017 carried forward can usually be set against total profits by claim; large companies are limited above a £5 million allowance.
- Group relief lets a loss be surrendered to another company in a 75% group.
The same period, then 12 months back
Section 37 of the Corporation Tax Act 2010 lets a company claim to set a trading loss against its total profits (including chargeable gains) of the accounting period in which the loss is made, and — if the claim says so — against total profits of periods falling in the 12 months before that period began.
HMRC’s manual adds that a company can’t carry a loss back without first setting it against profits of the current period, and can’t pick and choose which profits it covers. GOV.UK stresses that the carry-back is to the previous 12 months, not the previous accounting period, and that the company must have carried on the same trade then. A carry-back can produce a repayment of Corporation Tax already paid.
The temporary 3-year carry-back during the pandemic only applied to accounting periods ending between 1 April 2020 and 31 March 2022.
Deadline: within 2 years after the end of the loss-making period, or a longer period if HMRC allows (section 37(7)). GOV.UK says the claim should include the company name, the period of the loss, the amount and how it is to be used, and can be made in the Company Tax Return, an amendment, or a letter.
Ceasing to trade: 3 years back
For a loss in the final 12 months of a trade, section 39 extends the carry-back from 12 months to 3 years. GOV.UK says profits of the most recent years are used first. There is also terminal relief for carried-forward losses from 1 April 2017. Both are claimed within 2 years.
Carrying losses forward
- Losses from before 1 April 2017 can only be carried forward against profits of the same trade.
- Losses from 1 April 2017 can usually be set against the company’s total profits of later periods. Under section 45A the company makes a claim — for all or part of the loss — within 2 years after the end of the later period. Where that isn’t available (other than because the trade has ceased), losses can still go against profits of the same trade.
- GOV.UK says to keep separate records of carried-forward losses made before and after 1 April 2017.
The £5 million deductions allowance. HMRC’s manual explains that profits above a company’s deductions allowance (a maximum of £5 million per 12-month period, shared across a group) can only be reduced by carried-forward losses by 50%. Most small companies won’t be affected.
Group relief
A company can surrender its trading loss to another company in the same 75% group — one a 75% subsidiary of the other, or both 75% subsidiaries of a third company (with further tests on profits and assets). The claimant claims in its Company Tax Return with the surrendering company’s consent, and the claim can be for part of the loss. HMRC’s manual says the time limit is normally two years after the end of the claimant’s accounting period. Losses from 1 April 2017 that have been carried forward can also be group-relieved in later periods.
Rates for context
For the financial year from 1 April 2026, GOV.UK gives a small profits rate of 19% and a main rate of 25%, with marginal relief between £50,000 and £250,000 of profits.
Getting help
The company’s accountant normally prepares the return and loss claims. Note that the tax charity TaxAid says it can’t help with Corporation Tax. Use the deadline calculator to work out the section 37 date from your accounting period end, and see where to get help.
Sources
Checked 4 October 2026 for the 2026/27 tax year. We read these primary sources for this guide:
- GOV.UK: Work out and claim relief from Corporation Tax trading losses (gov.uk)
- GOV.UK: Corporation Tax — terminal, capital and property income losses (gov.uk)
- GOV.UK: Carry forward Corporation Tax losses (gov.uk)
- Corporation Tax Act 2010, section 37 (legislation.gov.uk)
- Corporation Tax Act 2010, section 39 (legislation.gov.uk)
- Corporation Tax Act 2010, section 45A (legislation.gov.uk)
- HMRC Company Taxation Manual CTM04505: Relief against total profits (gov.uk)
- HMRC Company Taxation Manual CTM04100: Losses carried forward (gov.uk)
- HMRC Company Taxation Manual CTM04135: Carry-forward claims (gov.uk)
- HMRC Company Taxation Manual CTM04830: Loss restriction (gov.uk)
- HMRC Company Taxation Manual CTM80105: Group relief outline (gov.uk)
- HMRC Company Taxation Manual CTM80151: The group relationship (gov.uk)
- HMRC Company Taxation Manual CTM97045: Group relief time limit (gov.uk)
- GOV.UK: Corporation Tax rates and allowances (gov.uk)
Contains public sector information licensed under the Open Government Licence v3.0. This guide adapts and summarises that information in our own words. taxloss.co.uk is an independent guide. It is not affiliated with, endorsed by or connected to HM Revenue & Customs (HMRC) or the UK Government. Spotted something out of date? Tell us.