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 trading 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 in some cases) |
| 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 next year's trading 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.
However, there's a restriction: if your carried-forward losses exceed £5 million, only 50% of profits above £5 million can be relieved. For most small companies, this cap is irrelevant — you'd need profits above £5 million for it to bite.
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).
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:
Reporting a loss in the current period
| Box | Purpose | What to Enter |
|---|---|---|
| Box 3 | Trading profits | £0 (you can't have a negative figure here) |
| Box 275 | Trading losses of this period | The loss amount (positive figure) |
| Box 285 | Losses brought forward from earlier periods | Losses from previous years you're claiming |
Key points about Box 275 and Box 285
Box 275 — Trading losses of this period: This is where you report the current year's trading loss. Enter it as a positive figure. For example, if your company lost £15,000, enter £15,000 in Box 275.
Box 285 — Losses brought forward: This is where you enter losses from previous accounting periods that you're using against this period's profits. You can only claim up to the amount of available profits — you can't create a loss by claiming too much.
Offsetting losses against current-year total profits
| Box | Purpose |
|---|---|
| Box 275 | Trading losses of this period |
| Box 280 | Losses of this period set against total profits |
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 280. The loss set off here reduces your total profits chargeable in Box 21.
Carrying losses back
| Box | Purpose |
|---|---|
| Box 275 | Trading losses of this period |
| Box 280 | Losses set against total profits |
| Box 290 | Losses carried back to previous periods |
Box 290 is for losses you want to carry back to the previous accounting period. You'll also need to amend the previous year's CT600.
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 1 (Turnover): £30,000
- Box 3 (Trading profits): £0
- Box 275 (Trading losses of this period): £18,000
- Box 21 (Total profits chargeable): £0
- Box 145 (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 1 (Turnover): £85,000
- Box 3 (Trading profits): £50,000
- Box 285 (Losses brought forward): £18,000
- Box 21 (Total profits chargeable): £32,000
- Box 145 (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): £20,000
- Box 280 (Losses set against total profits): £5,500
- Box 21 (Total profits chargeable): £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, you must claim the maximum available — you can't choose to use only part of the loss against current-year profits and carry forward the rest. 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
- Enter the loss in Box 275 on the current year's CT600
- Enter the amount to carry back in Box 290
- Amend the previous year's CT600 (or submit a claim to HMRC)
- HMRC processes the refund
Extended carry-back (3 years)
In specific circumstances (terminal losses when a trade ceases, or during special HMRC provisions), losses can be carried back up to 3 years. 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 Box 195 (Net chargeable gains) and supplementary pages, not in the trading loss boxes
- 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 carried-forward losses. You must actively claim them in Box 285 on the next 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 reporting the loss in the loss year
File a CT600 for the loss-making year and enter the loss in Box 275. 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 decide whether to carry it forward, set it against current-year profits, or carry it back. 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 in Box 285 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, 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?
When carrying forward, you must use the losses against the first available profits — you can't skip a profitable year and wait for a year when the tax rate is higher. However, the amount used is limited to the profits available, so partial use is automatic if profits are less than the total losses.
What CT600 box do I use for losses brought forward?
Box 285 — "Losses brought forward claimed against profits of this period." Enter the amount of previously carried-forward losses you're claiming against this period's profits.
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.