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Current year relief and carry back losses

Produced by a Tolley Corporation Tax expert
Corporation Tax
Guidance

Current year relief and carry back losses

Produced by a Tolley Corporation Tax expert
Corporation Tax
Guidance
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Current year relief for trading losses

Trading losses can be offset against total profits of the same period. Total profits covers, for example, chargeable gains or non-exempt dividends. The loss is set against profits before any qualifying charitable donations have been deducted, see the Qualifying charitable donations guidance note.

The maximum claim for relief is the lower of the available loss or the available profit. In other words, no partial claims are allowed and the claim must either use all of the loss, or eliminate all of the available profits.

See Example 1.

Once trading losses have been relieved against profits of the same period in which the loss was generated, a claim may also be made to carry back any remaining loss against profits of the preceding 12 months. This is explained in more detail below.

Potential restrictions on trading loss relief

Relief for losses against current or preceding year profits is not allowed in certain circumstances, as follows:

  1. •

    the losses are incurred in carrying on a trade outside the UK

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