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Companies and trading losses

Source: HM Revenue & Customs | 11/10/18

Corporation Tax relief may be available when a company or organisation makes a trading loss. The loss may be used to claim relief from Corporation Tax by offset against other gains or profits of the business in the same or previous accounting period.

The loss can also be set against future qualifying trading income. Any claim for trading losses forms part of the company tax return. The trading profit or loss for Corporation Tax purposes is worked out by making the usual tax adjustments to the figure of profit or loss shown in the company or organisation’s financial accounts.

Some of the basic requirements for a trade loss to be set off against other income sources include:

  • being within the charge to Corporation Tax
  • the trade must be carried on a commercial basis and with a view to the realisation of profit
  • at least some of the trade must be carried out within the UK

The rules for the Corporation Tax treatment of carried forward losses changed from 1 April 2017. The changes increased flexibility to set off carried forward losses against total profits of the same company or another company in a group whilst at the same time introduced new restrictions as to the amount of profits against which carried forward losses can be set. Any losses carried forward prior to 1 April 2017 fall under the old loss relief rules and must be handled accordingly.

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Some accountancy websites also provide pages and pages of tax information, helpsheets, etc. We prefer to give clients personally tailored advice. So, if you want details of tax rates and allowances just go to the HMRC website on which you should find what you’re looking for. If you need more individual advice please contact us.

Below are links to websites you may find of interest, but as we like to support our local community and clients, we have included links to websites that may be of interest:

HMRC

FT

BBC

VEALE WASBROUGH VIZARDS

CESP

PRACTICE INDEX

SIMCOMM ACADEMY

More Local:

FOOTPLATE EXPERIENCE

ANGLEBURY PRESS

OFFCAMBER.CO.UK

SANDISONS

Badger House,

Salisbury Road, Blandford Forum

Dorset DT11 7QD

Telephone: 01258 451234

Fax: 01258 453280

Sandisons is the trading name of Sandisons Limited. Registered office: Badger House, Salisbury Road, Blandford Forum, Dorset DT11 7QD.  Co. Reg. No. 05068291

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