Trading loss

Carry back

A trading loss can be offset against profits of any kind in the current accounting period. If not so used, a trading loss can be offset agains profits of a preceding accounting period of equal length. A claim must be made within two years of the end of the accounting period in which the loss occurs (s 396(9)).

A loss in the final year of trading (a terminal loss) can be offset against profits of the three immediately preceding years (s 397). This may give rise to a repayment of tax.

Carry forward

An unused trading loss may be carried forward for offset against trading profits of the next and later accounting periods (s 396).

A Case III loss can be offset against Case III income of the current period. If not so used, any excess can be carried forward for offset against Case III income of the next and later accounting periods. The same treatment applies to Case IV losses.

Value basis relief

A 12.5% trading loss may be offset against a 25%-taxed profit, but only on a value basis.

Rental loss

A Case V loss can be offset against Case V income of the current period. If not so used, any excess can be carried forward for offset against Case V income of the next and later accounting periods (s 399).


Capital loss

A capital loss can be offset against chargeable gains of the current period. If not so used, any excess can be carried forward for offset against chargeable gains of the next and later accounting periods.

Group relief

A group member company may surrender an unused trading loss to a company within the same 75% group (s 420).

A company that takes over a trade previously carried on by another company may claim the predecessor’s unrelieved losses (s 400) if the trade continues, but “loss-buying”, i.e., acquiring the accumulated losses of a ceased business, is disallowed (s 401).