Carry forward a company trading loss

There are a significant number of reliefs available to businesses that suffer losses. Certain losses that your company has not used in any other way can be carried forwards against profits in future accounting periods. In general, a company can carry trading losses forward to deduct from profits of future accounting periods as long as the trade continues.

However, there are limitations on the total amount of carried-forward losses that can be offset against profits for accounting periods starting from 1 April 2017.

These apply to carried-forward trading losses so that the total:

• amount that can be relieved using carried-forward trading losses that arose before 1 April 2017 is restricted to, broadly, the amount of an allowance up to £5 million, plus 50% of remaining trading profits after deduction of the allowance;
• overall amount that can be relieved using most types of carried-forward losses – including carried-forward trading losses incurred either before or after 1 April 2017 – is restricted to, as set out above, the amount of an allowance up to £5 million, plus 50% of remaining total profits after deduction of the allowance.

Any claim for trading losses forms part of the Company Tax Return. The trading profit or loss for Corporation Tax purposes is worked out by making the usual tax adjustments to the figure of profit or loss shown in the company’s or organisation’s financial accounts.