Claiming pre-trading expenses on your Corporation Tax return

Last updated: 30 August 2026

Short version. Qualifying revenue costs your company incurred while getting ready to trade can still receive tax relief. Costs from the seven years before trading began are treated as if the company incurred them on the first day of trading, so they reduce the taxable profit of the period in which trading started. If the costs were expensed in an earlier year's accounts, before the trade existed, enter the total in the Qualifying pre-trading expenditure field in the Tax adjustments step and we deduct it in your tax computation, with the statutory reference, without changing your accounts. If the costs are already inside this year's expense figures, they are being deducted through those figures and you should not enter them again.

1. What counts as qualifying pre-trading expenditure

The rule comes from section 61 of the Corporation Tax Act 2009. A cost qualifies when all of these are true:

It was incurred within seven years before the day trading began. Older costs get no relief.
It was incurred wholly and exclusively for the trade. The same test that applies to any business expense.
It is a revenue cost, not a capital one. A running cost rather than the purchase of a lasting asset. Typical examples can include insurance, recurring software subscriptions, advertising, travel to meet suppliers and revenue professional fees that are not connected with forming the company or acquiring a capital asset.
It would have been deductible if the company had already been trading. A cost that would be disallowable anyway, such as client entertaining, does not become deductible by being paid early.
The company that incurred the cost is the company that started the trade. The relief does not transfer automatically from a director or another person to the company.

HMRC explains the scope at BIM46351 and the relief at BIM46355.

2. Was the cost incurred by the company?

Section 61 relief is only available to the person that incurred the expenditure and then started the trade. For a company filing a Corporation Tax return, this means the company must have incurred the cost and the same company must have started the trade.

The company incurred the cost after incorporation. It can potentially qualify if all the other conditions are met. Keep the invoice, receipt and evidence of the business purpose.
A director paid a company bill after incorporation. Check that the invoice or contract belongs to the company and that the payment is recorded correctly in the company's accounts, for example through the director's loan account. Paying personally does not by itself prove who incurred the cost.
The cost arose before the company was incorporated. Do not assume that reimbursing the director later makes it the company's pre-trading expenditure. The company did not exist when the cost arose. Ask an accountant before including it in this field if the position is not clear.

3. What does not qualify

Company formation costs. The Companies House incorporation fee and professional fees specifically for forming or registering the company are treated by HMRC as capital, so they are not deductible. HMRC explains this at BIM46435.
Equipment and other lasting assets. A laptop or machinery bought before trading is capital spending. Relief comes through capital allowances instead, which have their own rule treating pre-trading purchases as made on the first day of trading.
Original website creation and substantial software projects may be capital. Do not assume every website or software cost is a revenue expense. HMRC says routine website updates are likely to be revenue, while the original cost of creating a lasting website is likely to be capital. See BIM35815.
Loan interest and similar finance costs. These follow their own rules and are outside the pre-trading expenditure field.
Costs more than seven years before trading began.
Costs that would be disallowable anyway, such as client entertaining or fines.

4. Which of the two situations are you in?

Where you record the costs depends on whether they are already included in the expense figures in your annual accounts. Use the option below that matches your accounts.

The costs are inside this year's expense figures. This is common when your first accounting period runs from incorporation and trading started during it. The costs are already reducing your accounting profit, so the deduction is already happening. Do not enter them in the pre-trading field as well. If part of them does not qualify, put that part in Disallowable expenses so it is added back.
The costs were expensed in an earlier year's accounts, before the trade existed. For example the company was dormant for its first year, spent money getting ready, and those costs produced a small loss in that first year's accounts. There was no trade that year, so no tax deduction was possible then, and there is no trading loss to carry forward either. The deduction belongs in the year trading started. Enter the qualifying total in the Qualifying pre-trading expenditure field. Your accounts do not change, the earlier year stays as your comparative, and the deduction appears in the tax computation only.

5. A worked example

A company is incorporated in 2024 and is not yet trading. In its accounts year ended 31 March 2025 it spends £2,400 getting ready: £900 on pre-launch advertising, £600 on business insurance, £500 on recurring software subscriptions and £400 on travel to suppliers. It also paid a £150 Companies House incorporation fee. Its first accounts show a loss of £2,550, and no Corporation Tax deduction is possible because there is no trade yet.

Trading begins during the next accounting year, ended 31 March 2026, and the company makes an accounting profit of £9,000. In the Tax adjustments step it enters 2400 in Qualifying pre-trading expenditure. The formation fee is capital, so it gets no deduction and is simply left out.

This simplified tax calculation assumes a 12-month Corporation Tax period, no associated companies and no other income or adjustments.

The tax computation then reads:

Accounting profit: £9,000
Less qualifying pre-trading expenditure (CTA 2009 s61): £2,400
Taxable trading profit: £6,600
Corporation Tax at 19%: £1,254

The accounts still show £9,000 profit this year and the £2,550 loss as last year's comparative. Only the tax computation changes.

6. Where to enter it

The field is called Qualifying pre-trading expenditure and sits in the Tax adjustments section of the wizard, next to Disallowable expenses. Enter whole pounds. The deduction appears in your tax computation as its own line, "Less: Qualifying pre-trading expenditure (CTA 2009 s.61)", and the computation is filed to HMRC with your return, so HMRC sees exactly what was claimed and under which rule. There is no separate CT600 box for it. The deduction works by reducing your trading profit, or deepening your trading loss, which is how the legislation applies it.

If your company was dormant and then started trading part way through an accounts year, check dormant company started trading: accounts and CT600 dates first, because your Corporation Tax period may start later than your accounts period.

7. Do not claim the same cost twice

Not in the field and in your expenses. Only enter costs that are not already inside this year's expense figures. A cost sitting in your expenses is already being deducted.
Not in the field and in losses brought forward. If the company was not trading in the earlier year, its accounting loss is not a trading loss for tax, so there is nothing to put in Trading losses brought forward. The pre-trading field is the only place the amount goes.
Not in the field and in capital allowances. Equipment goes through capital allowances only.

8. If you are not sure

Whether each cost qualifies is your judgement as the person filing, in the same way it would be if the company had already been trading. Keep the receipts and a simple list of what each cost was for. If you are unsure about a specific cost, leave it out of the field, file with what you are sure of, and ask us or an accountant. This article is general guidance, not tax advice.