Terminal loss relief for trade losses in the final 12 months

Trading losses incurred by a company in the final 12 months leading up to the discontinuance of trade may be carried back and set against the company’s total profits of accounting periods falling within the three years ending immediately before the beginning of the period in which the terminal loss is incurred. So if the final accounting period for the company is from 1 January 2026 to 31 December 2026, the three-year period for this terminal loss relief will be from 1 January 2023 to 31 December 2025.

A carry-back claim under CTA 2010, s 37, as extended by s 39, requires relief against total profits of the loss-making accounting period first; only the balance can be carried back.

Where the final 12 months span two accounting periods, the loss of the final accounting period qualifies in full and the loss of the penultimate accounting period qualifies in proportion to the time falling within those final 12 months. Each loss has its own three-year