D1.1104 Current and prior year relief for trading losses
For the latest New Development, see ND.1900.
Generally, if a company incurs a trading loss in any accounting period it may claim to firstly offset that loss against its total corporation tax profits of that accounting period and any balance remaining can be set off against total profits of earlier accounting periods during which it was carrying on the same trade1. The amount of a loss incurred in a trade in any accounting period is to be computed in the same way as trading income from the trade in that period would have been computed, see Division B2.12.
Relief is only allowable for trading losses if the company is carrying on the trade so as to be within the charge to corporation tax in respect of it3. For example, a non-resident company carrying on a trade in the UK through a permanent establishment can only get relief for losses incurred by that permanent establishment. If a non-resident company trading abroad becomes UK resident and chargeable to corporation tax in respect of its trade on a particular date, no relief is available for losses incurred before that date4.
The amount of a loss which can be claimed under these provisions does not include qualifying charitable donations, which are allowed as a deduction against total profits under a separate provision in CTA 2010, s 189. Such qualifying charitable donations are deducted from total profits as reduced by losses and other reliefs5.
Certain non-qualifying losses