Corporation Tax Losses: How to Carry Forward and Carry Back Losses

If your company made a loss this year, there's a silver lining: you can use those losses to reduce your corporation tax bill — either in the current year, past years, or future years.

Understanding how loss relief works can save your company thousands of pounds. Here's everything you need to know.

Types of Losses

Not all losses are treated equally for corporation tax purposes:

Trading Losses

Losses from your company's trade or business. These are the most common and have the most flexible relief options.

Non-Trading Losses

Losses from non-trading activities, such as:

• Property losses (rental income)
• Non-trading loan relationship deficits (interest on loans not used for trade)
• Capital losses (selling assets at a loss)

Management Expenses

Expenses of managing an investment company that exceed income.

How to Use Trading Losses

You have several options when your company makes a trading loss:

1. Set Against Current Year Profits

You can set trading losses against your company's total profits for the same accounting period. This includes:

• Investment income
• Property income
• Chargeable gains

CT600 Box: Box 275 (Total trading losses of this or a later accounting period). Enter the loss as a positive figure. This claims relief under Section 37 of the Corporation Tax Act 2010. You should also record the loss arising in box 780 of the losses section, so HMRC has a record of what's available to use later.

2. Carry Back to Previous Year

You can carry back trading losses to set against the total profits of the previous 12 months.

Key rules:

• The loss is set against profits of the immediately preceding accounting period
• If you elect to claim current year relief, you must set it against all current period profits first — only the excess can then be carried back
• The carry-back claim must be made within 2 years of the end of the loss-making period

CT600 Boxes: a carry-back is claimed against the earlier period. On the earlier period's return (or an amendment to it), enter the carried-back amount in box 275 and tick box 280 (which signals that box 275 includes amounts carried back from a later period). On the loss-making period's own return, put an 'X' in box 45 (claim or relief affecting an earlier period) and box 40 if you expect a repayment.

3. Carry Forward to Future Years

Any unused trading losses can be carried forward indefinitely to set against future profits.

Key rules:

• For losses arising from 1 April 2017, carried-forward losses can be set against total profits (not just trading profits)
• There's a £5 million deductions allowance (shared across a group) — carried-forward losses up to this amount can offset profits freely
• Above £5 million, only 50% of remaining profits can be offset

CT600 Boxes (completed in the period you claim the relief):

• Box 160 — trading losses brought forward set against trading profits from the same trade
• Box 285 — post-April 2017 losses brought forward claimed against total profits (the more flexible route, subject to the £5 million allowance and 50% restriction)

4. Group Relief

If your company is part of a group, trading losses can be surrendered to other group companies to reduce their tax bills.

Key rules:

• Both companies must be in the same group (75% ownership)
• The surrender is for the overlapping period of both companies' accounting periods
• The claiming company reduces its taxable profits

CT600 Boxes: the claiming company enters group relief in box 310 (for current-year losses) or box 312 (for group relief of carried-forward losses arising after 1 April 2017). You must also complete supplementary page CT600C, indicated by ticking box 105 on the main return. The surrendering company shows the maximum loss available to surrender in box 785.

Practical Examples

Example 1: Simple Carry Forward

Your company made a £30,000 loss in year 1 and a £50,000 profit in year 2.

• Year 1: No tax to pay (£30,000 loss recorded in box 780)
• Year 2: Taxable profit = £50,000 - £30,000 = £20,000
• Year 2 tax at 19% = £3,800 (instead of £9,500)

Saving: £5,700

Example 2: Carry Back

Your company made £40,000 profit in year 1 (paid £7,600 tax) and a £25,000 loss in year 2.

• Carry back £25,000 to year 1
• Year 1 revised taxable profit = £40,000 - £25,000 = £15,000
• Year 1 revised tax = £2,850
• HMRC refund: £4,750

Example 3: Large Company with £5m Restriction

A larger company has £10 million in carried-forward losses and makes £20 million profit.

The maximum carried-forward loss relief the rules permit equals the deductions allowance plus 50% of remaining profits:

• Deductions allowance: £5 million (offset freely)
• 50% of remaining profits: 50% × (£20m – £5m) = £7.5 million
• Maximum the rules permit: £5m + £7.5m = £12.5 million

But the company only has £10 million of losses, so the offset is capped at £10 million:

• Offset used: £10 million (all available losses)
• Taxable: £20m – £10m = £10 million
• Losses carried forward: nil

The 50% restriction only prevents full offset when carried-forward losses exceed what the deductions allowance and 50% cap together permit. In this example the losses (£10m) are below that cap (£12.5m), so all losses are used.

Which CT600 Boxes to Complete

Important Deadlines

Common Mistakes

1. Not Claiming Losses at All

Many small company directors don't realise they can claim losses. Even if you don't owe tax this year, make sure your CT600 records the loss so it's available for future years.

2. Missing the Carry-Back Deadline

You have 2 years from the end of the loss-making period to claim a carry-back. After that, you can only carry forward.

3. Confusing Trading Losses with Capital Losses

Capital losses (from selling assets) can only be set against chargeable gains — not trading profits. They follow different rules.

4. Not Reporting Losses on the CT600

If you don't include losses on your CT600, HMRC won't know about them. Always complete the loss boxes (including box 780) even if there's no tax to pay.

Read more about common filing mistakes: 10 Common CT600 Mistakes and How to Avoid Them

Ready to File Your CT600?

Filing a CT600 with trading losses doesn't have to be complicated. For current-year set-off and carry-forward claims, Taxpipe walks you through the process step by step — just answer the questions and we handle the loss boxes automatically.

File your CT600 for £59 → — No accountancy jargon, no complex forms.

Related Articles

• Corporation Tax Rates 2025/26: Marginal Relief Calculator
• 10 Common CT600 Mistakes and How to Avoid Them
• How to File a CT600 Online — Step by Step Guide
• CT600 Amendments: How to Correct Mistakes on Your Return
• Capital Allowances for Small Companies
• Corporation Tax Refund: How to Claim Back Overpaid Tax

Related Articles

• Corporation Tax Group Relief: How to Share Losses
• Every Corporation Tax Relief Available (Complete List)
• Company Losses: Trading vs Non-Trading on CT600