Trading Losses for Limited Companies: Carry Forward, Carry Back and the £5m Deductions Allowance

A trading loss is not a dead end. Used well, it can get you a corporation tax repayment for last year, wipe out tax on future profits, or shelter gains and other income this year. Used badly, it is claimed in the wrong box, against the wrong profits, or not at all.

This guide explains every way a UK limited company can use a trading loss in 2026: in the same period, carried back 12 months, or carried forward indefinitely. It also covers the £5 million deductions allowance that caps how much carried-forward loss larger companies can use, how UK property losses fit in, and which CT600 box each figure goes in.

The figure that matters is the tax-adjusted trading result, not the loss in your accounts. You start with the accounting profit or loss. Then you add back depreciation and disallowable expenses, deduct capital allowances, and remove income that is taxed under a different heading.

So a company with a small accounting profit can still have a trading loss for tax, usually because of a large Annual Investment Allowance or full expensing claim. The reverse also happens: a big accounting loss caused by depreciation or client entertaining can shrink to a much smaller tax loss.

The loss of the period is reported in box 780 on the CT600, in whole pounds. Your tax computation should show the same figure in pounds and pence and reconcile how much of it was used and how much remains.

These are not either-or for the whole loss. You can use part of a loss this year, carry back some, and carry the rest forward. The only fixed rule is the order: current-period relief must be claimed before carry back, and whatever remains is carried forward.

A trading loss can be set against the company's other profits of the same accounting period. That includes bank interest, rental profits and chargeable gains on selling assets. This is relief under section 37 of the Corporation Tax Act 2010.

It is a claim, not automatic. In practice most companies with other income make it, because it gives relief at once. The amount relieved goes in box 275 ("trading losses of this or a later accounting period").

For example, a company has a £30,000 trading loss and a £12,000 gain on selling a property. It can set £12,000 of the loss against the gain, so no tax is due on it, and keep the remaining £18,000 to carry back or forward.

Once current-period profits are used up, a trading loss can be carried back against the total profits of the previous 12 months. If the earlier year paid tax, the result is a repayment from HMRC, which is often the fastest way to get cash from a loss.

• Order: current-period relief first, then carry back.
• Window: 12 months before the start of the loss period. If the earlier accounting period overlaps that window only partly, its profits are apportioned.
• Time limit: 2 years from the end of the loss-making period.
• Terminal losses: if the trade ceases, losses of the final 12 months can be carried back 3 years.
• The temporary extended 3-year carry back for 2020–2022 losses has ended. Ordinary carry back is 12 months.

How it appears on the CT600

Carry back has no money box of its own on the loss-making return. You claim it by ticking box 45 ("a claim or relief affecting an earlier period"). Your tax computation should show how much was carried back and which period it relates to.

If you also amend the earlier return, the relief received goes in box 275 and box 280 is ticked to show it includes losses from a later period. Do not use box 790 for carry back. That box is for losses of trades carried on wholly outside the UK.

Any loss not used this year or carried back is carried forward. There is no limit on how many years you can keep it. When the loss arose decides how flexibly you can use it:

The post-2017 rules let you choose how much to claim each year. You do not have to use a loss in a year where profits would be taxed only at the 19% small profits rate. You could save it for a year that falls in the marginal relief band, where the effective rate is 26.5%. Our corporation tax calculator shows where a given profit falls.

Restrictions apply. Carried-forward losses can be lost if the company changes ownership and there is a major change in the nature or conduct of the trade within five years. They also cannot be used once the trade has become small or negligible.

Since April 2017, larger companies cannot use carried-forward losses to cover all their profits. Under Part 7ZA of CTA 2010:

• Each company or group has a deductions allowance of £5 million a year (pro-rated for periods shorter than 12 months).
• Carried-forward losses can cover profits up to the allowance in full.
• Above the allowance, they can cover only 50% of the remaining profits.
• Any loss you cannot use because of the cap is not lost. It is carried forward to the next period.

Worked example: a standalone company has relevant profits of £10m and £8m of losses brought forward. The cap is £5m + 50% × £5m = £7.5m. It deducts £7.5m, pays tax on £2.5m, and carries £500,000 of loss forward.

Three points that are easy to miss:

• The cap applies only to carried-forward losses. Current-period relief and carry back are not restricted.
• In a group, the single £5m is shared out between members by a nominated company's allowance statement. A group company that has been given a nil share can relieve only 50% of its profits.
• Whenever a company deducts carried-forward losses, its return should include the statement required by s269ZZ giving the amount of its deductions allowance.

Most owner-managed companies never come close to £5m, so the cap will not affect them. It still matters to get right for groups, because a nil allocation can apply at any profit level.

Losses from letting UK property are a separate pool from trading losses. A property loss is first set against the company's total profits of the same period. Any excess is carried forward against future total profits and can be claimed in whole or in part.

Property losses used go in box 250. Brought-forward property losses share the same £5m deductions allowance as carried-forward trading losses. If you are new to the return itself, start with our plain-English guide to the CT600.

No CT600 box holds the losses carried forward to the next period. That figure lives in your tax computation, which is why the computation has to reconcile the loss pool line by line: loss arising, plus brought forward, minus relief used, minus carried back, equals carried forward.

• Automatic loss calculation: the trading loss in box 780 is worked out from your P&L, tax adjustments and capital allowances. You do not type it in.
• Brought-forward losses (trading and UK property) are entered in the Tax Adjustments step. WeFile then applies relief in the statutory order: box 160, then 275, then 250, then 285.
• Carry back: enter the amount to carry back and WeFile ticks box 45 on the CT600 and in the XML sent to HMRC. If the earlier period is also filed in WeFile, the earlier return detects the carry back and offers a one-click Apply. It then fills box 275 and ticks box 280.
• Deductions allowance: a panel in Tax Adjustments lets you state whether the company is in a group and enter its allocated allowance. The 50% restriction is applied automatically, and any restricted loss is carried forward.
• s269ZZ disclosure: printed on the tax computation, in the PDF and the iXBRL, whenever carried-forward losses are deducted.
• Reconciled loss memo: the computation shows loss arising, brought forward, used, carried back and carried forward to the penny, so next year's opening figure is clear.

1. Using the accounting loss instead of the tax loss. Depreciation, disallowable costs and capital allowances all change the figure.
2. Carrying back before claiming current-period relief. The law requires current-period profits to be used first.
3. Putting carry back in box 790. Box 790 is for overseas trades. Carry back is signalled by box 45.
4. Forgetting brought-forward losses. They are not filled in for you from HMRC's records. Take the carried-forward figure from last year's computation.
5. Ignoring the group allocation. A group company with no allowance statement, or a nil share, faces the 50% restriction at any profit level.
6. Missing the 2-year claim window. Carry back and current-period claims must be made within 2 years of the end of the loss period, usually by amending the return if it has already been filed.

Can a dormant company have trading losses?

A dormant company has no trade, so no new trading loss arises. Losses from earlier trading may still exist, but they cannot be used while there are no profits. See dormant company accounts explained.

Do I have to carry a loss back?

No. Carry back is optional. You can choose to carry the whole loss forward, for example if future profits are expected to be taxed at a higher marginal rate. Weigh that against the value of getting cash back now.

How do I get the repayment after carrying back?

Tick box 45 on the loss-making return and state the carry-back in the computation. HMRC sets the relief against the earlier period's liability and repays any tax already paid, with repayment interest where it applies.

Do associated companies affect loss relief?

Associated companies reduce the small profits and upper limits that set your tax rate. That changes the tax value of a loss, but not how much loss you can use. See associated companies explained.

Can I surrender a loss to another group company?

Group relief exists, but it uses the CT600C supplementary pages, which WeFile does not currently support. Companies claiming or surrendering group relief should use other software or an adviser for that return.

Is a loss lost if I file late?

No. Late filing brings penalties (see our deadlines and penalties guide), but losses still carry forward. Claims with time limits, such as carry back, must still be made within 2 years.

This article is general information about UK corporation tax rules as at October 2026 and is not professional tax advice. Check your own circumstances with HMRC guidance or a qualified adviser.

A trading loss is a tax asset. WeFile calculates it from your figures, applies relief in the correct statutory order, ticks the right boxes for carry back, applies the deductions allowance cap, and reconciles the loss pool on your tax computation. Your CT600 and your Companies House accounts can be filed together in one pass.

Start your filing, or if you file for clients, see the accountant membership for 100 filings a year.