Corporation Tax Losses: How to Carry Forward and Offset Against Future Profits
Your company made a loss this year. That's not great news, but there's a significant silver lining: HMRC lets you carry those losses forward and offset them against future profits, reducing your corporation tax bill in profitable years.
This is one of the most valuable (and underused) reliefs available to small companies. Here's how it works, which CT600 boxes to use, and how to make sure you don't leave money on the table.
How Trading Losses Work for Corporation Tax
When your company's allowable expenses exceed its trading income, you have a trading loss. This loss doesn't just disappear — HMRC gives you several options for using it.
The four ways to use trading losses
| Method | What It Does | Time Limit |
|---|---|---|
| Carry forward | Offset against future profits | Indefinite (post-April 2017 losses) |
| Set against current-year total profits | Offset against all profits in the same period | Same accounting period |
| Carry back | Offset against previous year's profits | 12 months (extended to 3 years for terminal losses) |
| Group relief | Surrender losses to other group companies | Same accounting period |
For most small companies, carry forward is the most common option. Loss relief is just one of many corporation tax reliefs available — make sure you're not missing others. You made a loss this year, and you'll offset it against profits when the company returns to profitability.
Carrying Losses Forward: The Rules
Post-April 2017 trading losses
Trading losses arising on or after 1 April 2017 can be carried forward and set against total profits (not just trading profits) of future accounting periods. This is more generous than the old rules.
Importantly, relief for these carried-forward losses is given by claim, not automatically. Each year you decide how much of the brought-forward balance to use — all of it, some of it, or nothing at all — and the rest carries forward again. This flexibility can matter when other reliefs are in play.
There's also a restriction for large loss pools: each company gets a £5 million deductions allowance per year. Brought-forward losses can be set against profits up to that amount in full, but only against 50% of profits above £5 million. For most small companies this cap never applies.
Pre-April 2017 trading losses
Losses from before 1 April 2017 can only be carried forward against profits of the same trade. They can't be offset against other types of income (e.g., investment income or rental income), and they're used automatically against the first available profits of that trade — there's no choice over timing or amount.
No time limit
Carried-forward trading losses never expire. You can carry them forward indefinitely until they're fully used. A loss from 2020 can still be offset against profits in 2030 if the company hasn't been profitable enough to absorb it earlier.
CT600 Box References for Losses
This is where most directors get stuck. If you want a full walkthrough of every CT600 box, see our CT600 box-by-box guide. Here are the key loss-related boxes:
Recording a loss in the current period
| Box | Purpose | What to Enter |
|---|---|---|
| Box 145 | Total turnover from trade | Your trade income |
| Box 155 | Trading profits | £0 — losses cannot be entered as a negative figure |
| Box 780 | Losses of UK trades — amount arising | The loss amount (positive figure), recorded here so it's on file to carry forward |
Using losses brought forward from earlier periods
| Box | Purpose |
|---|---|
| Box 160 | Trading losses brought forward set against trading profits of the same trade |
| Box 285 | Post-April 2017 losses carried forward, claimed against total profits |
Box 160 — Losses brought forward against trading profits: Enter the amount of brought-forward loss you're setting against this period's trading profits. Box 165 (net trading profits) is then Box 155 minus Box 160. You can only claim up to the amount of available trading profits.
Box 285 — Losses carried forward claimed against total profits: For post-April 2017 losses set against total profits (including non-trading income), enter the amount here.
Offsetting losses against current-year total profits
| Box | Purpose |
|---|---|
| Box 275 | Trading losses of this (or a later) period set against this period's total profits |
| Box 315 | Profits chargeable to Corporation Tax, after all deductions |
If you want to use this year's loss against other income in the same period (e.g., bank interest or rental income), enter the amount in Box 275. The set-off flows through Box 295 to reduce Box 315.
Note: Box 280 is a tick-box only — you put an 'X' there to flag that Box 275 includes carry-back relief from a later accounting period. It does not hold a monetary amount.
Carrying losses back
There is no single "carry-back amount" box on the loss year's return. The mechanics are:
- On the loss-making year's return, tick Box 45 (claim affecting an earlier period) and record the loss in Box 780
- Claim the carry-back by amending the previous year's CT600 (or by a standalone claim to HMRC). On that earlier return, include the carried-back amount in Box 275, with an 'X' in Box 280 to indicate that Box 275 includes carry-back relief from a later period
- HMRC processes the resulting refund
Practical Example: Carrying Losses Forward
Year 1: The company makes a loss
Accounting period: 1 April 2025 to 31 March 2026
- Trading income: £30,000
- Allowable expenses: £48,000
- Trading loss: £18,000
CT600 entries:
- Box 145 (Total turnover from trade): £30,000
- Box 155 (Trading profits): £0
- Box 780 (Losses of UK trades — amount): £18,000
- Box 315 (Profits chargeable to Corporation Tax): £0
- Box 525 (Self-assessment of tax payable): £0
The company pays no corporation tax. The £18,000 loss carries forward.
Year 2: The company is profitable again
Accounting period: 1 April 2026 to 31 March 2027
- Trading income: £85,000
- Allowable expenses: £35,000
- Trading profit (before loss relief): £50,000
- Losses brought forward: £18,000
- Taxable profit after loss relief: £32,000
CT600 entries:
- Box 145 (Total turnover from trade): £85,000
- Box 155 (Trading profits): £50,000
- Box 160 (Trading losses brought forward set against trading profits): £18,000
- Box 165 (Net trading profits): £32,000
- Box 315 (Profits chargeable to Corporation Tax): £32,000
- Box 525 (Self-assessment of tax payable): £6,080 (£32,000 × 19%)
Tax saved by carrying forward losses: £18,000 × 19% = £3,420
Without the carried-forward loss, the company would have paid £9,500 in corporation tax (£50,000 × 19%). The loss relief saved £3,420.
Setting Losses Against Current-Year Total Profits
Instead of carrying forward, you can set the current year's trading loss against the company's total profits in the same period. This is useful if the company has non-trading income.
Example
- Trading loss: £20,000
- Bank interest received: £500
- Rental income: £5,000
- Total non-trading income: £5,500
You can set £5,500 of the £20,000 loss against total profits, reducing this year's tax to nil. The remaining £14,500 carries forward.
CT600 entries:
- Box 275 (Trading losses set against total profits): £5,500
- Box 315 (Profits chargeable to Corporation Tax): £0
- Remaining loss to carry forward: £14,500
Important: It's all or nothing for current-year claims
When setting trading losses against current-year total profits, the claim must cover the maximum available — you can't use only part of the loss while profits remain to absorb it. (In the example above, the relief runs out at £5,500 because that's all the profit there is to offset.) However, you don't have to make a current-year claim at all — you can choose to carry forward the entire loss instead.
Carrying Losses Back
You can carry a trading loss back to the previous 12 months and offset it against that period's total profits. This triggers a corporation tax refund.
When to carry back
- The company paid corporation tax last year and made a loss this year
- You want a cash refund now rather than waiting for future profits
- The company might not be profitable again soon
How it works
- Tick Box 45 on the loss year's CT600 and record the loss in Box 780
- Amend the previous year's CT600 (or submit a standalone claim to HMRC) — the carried-back amount goes in Box 275 of that return, with an 'X' in Box 280
- HMRC processes the refund
Extended carry-back (3 years)
When a trade ceases, terminal losses from the final 12 months can be carried back up to 3 years. HMRC has also occasionally legislated temporary extended carry-back windows — as it did for 2020–2022 during the pandemic. For most ongoing businesses, the standard 12-month carry-back applies.
Capital Losses vs Trading Losses
Capital losses (from selling company assets at a loss) work differently from trading losses:
- Capital losses can only be set against capital gains — never against trading profits
- Capital losses carry forward indefinitely
- They're reported in the chargeable gains section of the CT600: gross gains in Box 210, allowable losses (including brought-forward capital losses) in Box 215, and net chargeable gains in Box 220. Unused capital losses carried forward are recorded in Box 825
- You can't carry capital losses back
Don't mix them up. A loss on selling equipment used in the trade might be a trading loss (if it affects the profit & loss account) or a capital loss (if it's the disposal of a capital asset). The accounting treatment determines which. For more on how asset disposals and capital allowances interact with your CT600, see our dedicated guide.
Record-Keeping for Losses
HMRC requires you to maintain records to support your loss claim. Keep:
- Accounts showing the loss for each period
- CT600 returns where the loss was declared
- Working papers showing the loss calculation
- Records of how losses have been used in subsequent years
Track your loss balance
Maintain a simple schedule showing:
| Period | Loss Arising | Loss Used | Balance Carried Forward |
|---|---|---|---|
| 2024/25 | £18,000 | £0 | £18,000 |
| 2025/26 | £0 | £18,000 | £0 |
This makes future filing much simpler and provides evidence if HMRC queries your claim.
Common Mistakes with Loss Relief
1. Forgetting to claim losses brought forward
HMRC won't automatically apply your post-April 2017 carried-forward losses — you must actively claim them. Enter the amount in Box 160 (against trading profits) or Box 285 (against total profits) on the profitable year's CT600. If you forget, you pay more tax than necessary.
2. Claiming more losses than available profits
You can only claim losses up to the amount of available profits. If you have £20,000 of losses carried forward but only £12,000 of trading profits, you can claim £12,000 — the remaining £8,000 carries forward again.
3. Not filing the CT600 for the loss year
File a CT600 for the loss-making year and record the loss in Box 780. If you don't file, HMRC has no record of the loss, and you can't carry it forward.
4. Mixing up trading and capital losses
Trading losses and capital losses use different boxes and different rules. Make sure losses are categorised correctly.
5. Not considering carry-back first
If the company paid tax last year and has a loss this year, carrying back gets you a refund now. Carrying forward only helps when you're profitable again — which might be years away. Consider your cash flow.
Filing Loss Claims with Taxpipe
Taxpipe walks you through the loss boxes step by step. Enter your trading figures, and if there's a loss, we'll help you set it against this year's other profits or carry it forward to future years. Carry-back claims (setting a loss against an earlier year's profits) are made by amending that earlier year's return and aren't part of the Taxpipe flow — you'll handle those directly with HMRC or an accountant. The relevant CT600 boxes are populated automatically.
If you're claiming losses brought forward from earlier periods, you'll enter the amount during the guided process, and we'll include it on your return.
Frequently Asked Questions
How long can I carry forward corporation tax losses?
Indefinitely. There's no time limit for carrying forward trading losses. They remain available until fully used against future profits.
Do I need to file a CT600 if my company made a loss?
Yes. You must file a CT600 for every accounting period for which HMRC has issued a notice to deliver, whether profitable or not. Filing the loss-making year's return is essential — it creates the official record of the loss you'll carry forward.
Can I carry forward losses if I change my company's trade?
Generally, no. If there's a major change in the nature or conduct of the trade, HMRC can deny the carry-forward of pre-change losses. Minor changes are usually fine, but completely changing what your company does (e.g., from IT consulting to property development) could invalidate earlier losses.
Can I choose how much loss to carry forward?
For losses arising on or after 1 April 2017, yes. Relief is given by claim (CTA 2010 s.45A), so you choose each year how much of the brought-forward balance to use — all of it, some of it, or none — and the rest carries forward again.
Pre-April 2017 trading losses are different: they're set automatically against the first available profits of the same trade, with no choice over timing or amount.
What CT600 box do I use for losses brought forward?
Box 160 if you're setting brought-forward trading losses against this period's trading profits, or Box 285 if you're claiming post-April 2017 carried-forward losses against total profits. Enter the amount of previously carried-forward losses you're claiming this period.
Made a loss this year? Make sure it counts. File your CT600 with Taxpipe — we'll calculate your loss, populate the right boxes, and make sure you can carry it forward properly. Just £59.