If you make a trading or professional loss, you may reduce your income from all sources by the amount of the loss (s 381). Any unused balance may be carried forward against your trading or professional income for the next and later tax years (s 382).

You can use current capital allowances to create or increase a trading or professional loss arising in the tax year’s basis period, i.e., the period the profits of which form the basis of the tax assessment – usually a 12 month period ending in the tax year (s 392).

If you make a loss in the final year of your trade or profession (a terminal loss), you may carry it back for set-off against the income of the three immediately preceding tax years (s 385-389). This may give rise to a repayment of tax for those years.

A Case IV loss may be set against Case IV income and any unused balance may be carried forward against Case IV income of later tax years (s 384).

If you make a Case V (rental) loss, you can carry it forward for set-off against rental income of the next and later tax years (s 385).