If your company makes a trading loss, it may be able to claim relief to reduce its Corporation Tax liability. Trading losses can often be used in different ways, depending on your company’s circumstances.

A company may be able to use a trading loss against profits from the same accounting period, carry it back to reduce profits from an earlier period, or carry it forward to offset against future profits from the same trade.

When calculating a trading loss, adjustments may be needed to the company’s accounting profit or loss, including the impact of capital allowances and certain other tax adjustments. The amount of relief available will depend on the company’s individual circumstances.

If a loss is carried forward, it can usually be used against future profits. However, there are a number of restrictions that can apply to the amount of carried-forward losses that can be offset in certain circumstances.

A company may also be able to carry a trading loss back to claim a repayment of Corporation Tax previously paid. This can provide valuable cash flow support by resulting in a tax repayment.

Claiming available loss relief can help reduce the impact of a trading loss and ensure your company does not pay more Corporation Tax than necessary.