Using trading losses to reduce your Corporation Tax

Looking for loan interest deficits instead? Use the separate non-trading loan relationship deficits brought forward field. Do not include those amounts in your trading loss balance.

1. What a trading loss is

Your company makes a trading loss when its allowable trading costs (cost of sales and day-to-day running expenses) are more than its trading income for the year. A loss isn’t wasted. HMRC lets you keep it and use it to reduce tax in a year when you do make a profit.

If your company makes a loss this year, SimpleCompanyTax reports it automatically and it’s available for future years, so you don’t need to do anything special. This article is about the other direction: using a loss from a previous year against this year’s profit.

2. “Carried forward” vs “brought forward”: same loss, two views

These two phrases trip a lot of people up. They describe the same pot of unused losses, just from different years:

• Carried forward means looking forwards from the year the loss happened: “we made a £10,000 loss in 2023/24, so we carry £10,000 forward.”
• Brought forward means looking back from the year you use it: “we’re bringing forward £10,000 of losses from earlier years into 2024/25 to set against our profit.”

So a loss you carried forward from last year is the same figure you bring forward into this year. That’s the number you enter.

3. How a brought-forward loss reduces your tax

A brought-forward trading loss is set against your trading profit for the year, before the tax is worked out. A worked example:

• Trading profit this year: £50,000
• Trading losses brought forward: £30,000
• Profit chargeable to Corporation Tax: £20,000 (£50,000 − £30,000)
• Corporation Tax at 19%: £3,800 instead of £9,500, a £5,700 saving

A couple of sensible limits apply automatically:

• You can’t use more loss than the profits available for that type of relief. If you bring forward £30,000 but only made £20,000 profit, we use £20,000 and the remaining £10,000 carries forward again to a future year.
• Same-trade-only losses reduce trading profit through box 160. Eligible post-2017 losses can be claimed against total profits in box 285, including bank interest.
• A company whose only income is rent has no trading profit, so a trading loss cannot be used against it, and the wizard does not show this box for a company with no trade. What an earlier unused loss is depends on where it came from, not on what the company does now, so check your last tax computation. An unused UK property business loss goes in Property losses brought forward, where it reduces total profits, see property income and losses. An unused non-trading loan relationship deficit, for example from mortgage interest, goes in Non-trading loan relationship deficits brought forward. A loss from a trade the company has stopped stays a trading loss and cannot be set against rent.

4. Where to enter it in SimpleCompanyTax

Opening pool and claim are different: enter the unused balance in Trading losses brought forward. Use Trading losses to claim against total profits (box 285)for the selected claim. Follow the exact claim-entry stepsfor blank, zero, same-trade-only amounts and two returns.

In the wizard, on the figures step, open Tax adjustments and fill in “Trading losses brought forward” with the total unused trading losses you’re bringing into this year. Leave it as 0 if you have none. The live Corporation Tax estimate updates as you type, so you’ll see the effect straight away, and we report same-trade relief in CT600 box 160 and the total-profits claim in box 285, not the full unused balance you entered.

Box 160 stays blank in a period with no trading profit. That does not mean none of your losses are used. This period's trading loss can be set against other profits, such as interest, in box 275. Eligible earlier losses can be claimed against total profits in box 285. Your tax computation shows the unused balance, which carries forward while the trade continues.

For example, if the trade continues and the company has no other profits, an opening balance of £4,000 and a loss this period of £10,000 give £14,000 carried forward.

In your computation PDF, the Trading Loss section opens with Trading losses brought forward. This is the unused balance entering that return. For a single return, or the first return of a period over 12 months, it is the figure entered in the wizard. If you expected an earlier loss balance and see £0, check the field. A zero does not tell you whether the field was blank or you entered 0.

For the second return of a long period, the opening is the first return's closing balance after relief. It can be £0 when you entered a positive figure because the first return used it all. It can also be positive when you entered no earlier losses because the first return made a loss. Use the final return's Loss carried forward figure for the balance leaving the whole period. Do not add the two closing balances. If the trade stopped permanently by the end of the final CT600 return, tick The company permanently stopped trading on or before [the displayed date] at the bottom of Financial data. The unused trading loss then appears as not carried forward. Terminal loss relief may be available as a separate claim that this service does not make.

5. How to find your figure

The amount to enter is your company’s cumulative unused trading losses. You can find it from:

• your previous tax computation, under “Losses carried forward to the next period”. This is the best source, and every filing we produce includes one. If you filed with us last year, the figure is in the tax computation PDF in your documents,
• your company’s HMRC online account (Corporation Tax), which shows losses carried forward, or
• your accountant, if they hold your loss records.

Do not read the figure off box 780 of last year’s CT600. That box is headed “amount arising”, so it shows the loss that was made in that period, not the running total you still have available. The two are only the same in the rare case where a company made a loss, used none of it, and had nothing brought forward. Use the tax computation instead.

Enter your full unused balance, then identify the same-trade-only portion. The separate box 285 claim is optional: blank means the maximum shown and 0 means no claim. Read which losses qualify and how to choose your claim. Older drafts retain the earlier calculation until you reopen and save their filing details.

6. What’s covered (and what isn’t)

SimpleCompanyTax supports the common case: trading losses brought forward, set against this year’s profit, including eligible claims against total profits. For carry-back claims, use the linked loss-period claim guide. Other limitations remain:

• Carrying a loss back to an earlier year is supported in the loss-period return, see Loss carry-back claims and Corporation Tax refunds,
• group relief, or losses from other companies.
• Restricting automatic same-trade-only relief on purpose. HMRC lets a company make a claim to restrict the automatic relief, but the box 285 control applies only to total-profits claims and cannot express a box 160 restriction. You will need a filing method that supports that election, and professional advice may help. See HMRC's guidance on carried-forward loss claims.

Capital losses are supported, but they are a different thing and live in a different place. A capital loss comes from selling an asset for less than it cost, and it can only be set against chargeable gains, never against trading profit. Enter those with your gains rather than here, see chargeable gains when a company sells a property or investment. Property losses are supported too and can reduce your total profits, see property income and losses.

If your situation needs one of those, an accountant can file it for you. For most micro-entities with a single trade, the brought-forward relief above is exactly what’s needed.

Related: What is a CT600? · How to file company tax