Loss relief calculator, 2026/27

How this is calculated

A company trading loss can first be set against total profits of the same accounting period, then any surplus carried back against profits of the preceding 12 months, generating a repayment of corporation tax already paid for that earlier period at the rate that applied then.

Any loss still remaining after carry back can be carried forward indefinitely and set against total profits, not just trading profits, of later accounting periods. Groups with profits above £5 million a year face a restriction limiting how much carried-forward loss can be used in a single year, though this rarely affects smaller owner-managed companies.

The calculator applies the 2026/27 rates of 19% up to £50,000 and 25% above £250,000, with marginal relief in between, to both the prior year (assumed same rates for simplicity) and the following year, to show the tax difference each way.

Carry back or carry forward

Carrying back is attractive because it produces cash now, a repayment of tax already paid, rather than simply reducing a future bill. It is particularly useful where the loss year follows one or more profitable years and the company needs cash flow support.

Carrying forward makes more sense where the prior year had little or no profit to relieve against, or where the company expects a higher-rate year ahead and wants to shelter profit that would otherwise fall in the 25% band or the marginal relief band rather than the 19% band.

Practical points

Claims are made through the company tax return (or an amendment to it) for the period the loss arose, and the carry-back claim needs the prior period's return to already reflect the higher profit figure. There is no need to wait until the accounts are finalised to start planning around the likely loss.

If the company later changes the nature of its trade significantly or there is a change of ownership alongside a change of trade, carried-forward losses can be restricted or lost entirely, so get advice before any restructuring where a large loss is sitting on the balance sheet.

How far back can a trading loss be carried?

Standard relief allows a 12-month carry back against profits of the same trade. The temporary extended 3-year carry back that applied to losses in periods ending between 1 April 2020 and 31 March 2022 has now ended.

Can I choose to carry a loss forward instead of back?

Yes, loss relief against the prior year is not automatic for periods after the loss year; you can elect to carry the whole loss forward instead if that produces a better result, for example because a future year has more profit taxed at a higher rate.

Do carried-forward losses expire?

No, carried-forward trading losses can be used against total profits indefinitely, subject only to the £5 million group loss restriction that limits full use above that level of profit in a single year.

Can losses be used against non-trading income?

Losses carried forward can be set against total profits including non-trading income, but a loss relieved in the same year or carried back only 12 months is generally restricted to profits of the same trade unless it is the final year of trading.