What is a carried forward loss for corporation tax?
Answered 17 March 2026
What is a Carried Forward Loss for Corporation Tax?
A carried forward loss for corporation tax is a loss (or other amount) that arises in one accounting period and, because it cannot be (or is not) fully relieved in that same period, is transferred ("carried forward") to be set against profits of a future accounting period.
What the law says
A carried forward amount is defined in legislation and includes a range of loss types. The key categories are:
- A trade loss carried forward under s.45 CTA 2010 (pre-1 April 2017 trade loss against subsequent trade profits)
- A trade loss carried forward under s.45A CTA 2010 (post-1 April 2017 trade loss against total profits)
- A trade loss carried forward under s.45B CTA 2010 (post-1 April 2017 trade loss against subsequent trade profits)
- UK property business losses carried forward under s.62(5) or s.63(3) CTA 2010
- Overseas property business losses under s.66(3) CTA 2010
- Losses from miscellaneous transactions under s.91(6) CTA 2010
- Non-trading deficits from loan relationships under s.463G(6) CTA 2009
- Non-trading losses on intangible fixed assets under s.753(3) CTA 2009
- Expenses of management of investment business under s.1223 CTA 2009
For post-1 April 2017 trade losses specifically, the mechanics work as follows: where a company makes a loss in a trade in an accounting period beginning on or after 1 April 2017, and relief under s.37 CTA 2010 (current year/carry back) or group relief is not given for an amount of that loss, that unrelieved amount is carried forward to the next accounting period. The company may then make a claim for relief by deducting the unrelieved amount from its total profits of the later period.
A loss that has been offset against other profits of the same period, or surrendered by way of group relief, is excluded from being a carried forward amount.
Carried forward losses may also be surrendered as group relief for carried-forward losses under Part 5A CTA 2010, allowing a company to surrender eligible carried-forward losses to other group members.
HMRC guidance / practice
HMRC describes a carried forward loss as the portion of a loss that remains unused after relief in the period in which it arose, which is then available to reduce profits in future periods. For example, if a company makes a UK property business loss of £16 million in one year but only has £6 million of profits to relieve it against in the next year, the remaining £10 million unused loss is carried forward to be used against total profits in the next accounting period, subject to the loss restriction rules.
For UK property business losses arising from 1 April 2017, HMRC confirms that losses not relieved in the accounting period in which they arise are carried forward and may be deducted from the company's total profits of the next accounting period, provided:
- The loss has not been surrendered as group relief; and
- The company continues to carry on the UK property business in the next accounting period. A claim must be made before relief can be allowed, and the claim can relate to all or part of the loss carried forward. If the company cannot use all the loss in the next period, the unrelieved balance may continue to be carried forward to subsequent periods on the same conditions.
Reform from 1 April 2017: HMRC highlights that the relief available for trading losses carried forward changed significantly from 1 April 2017. A restriction was introduced limiting the total amount of relief available for carried-forward losses. In addition, most carried-forward trading losses incurred from 1 April 2017 can be set against total profits (not just profits of the same trade), and may be available for surrender as group relief for carried-forward losses.
In summary: a carried forward loss is the unrelieved portion of a corporation tax loss from a prior accounting period that is preserved and available to reduce a company's taxable profits in future accounting periods, subject to the applicable rules on the type of loss, continuity of business, claims requirements, and (post-April 2017) the 50% deductions allowance restriction.
Citation sources
As of 1 April 2017, the relief available for trading losses carried forward has changed. A restriction has been introduced, limiting the total amount of relief available for carried-forward losses. In addition, most carried-forward trading losses incurred from 1 April 2017 can be set against total profits, and may be available for surrender as group relief for carried-forward losses. See CTM04800 onwards for more about losses carried forward.
count under TIOPA10/S307(3)(a) because they have reduced the corporation tax profits of the second period are not also treated as carried forward amounts of the first period. A loss made by a company that has been offset against its other corporation tax profits of the same period, or surrendered by way of group relief is excluded from being a carried forward or carried back amount.
A company prepares accounts to 31 December each year. In the year ended 31 December 2021, it made a UK property business loss of £16 million. In the following year ended 31 December 2022, the company makes a profit of £9 million. There are ITPL carried forward at 31 December 2020 of £2million. The company is not part of a group so that it is entitled to the full Deduction Allowance of £5 million. A claim is made for the loss of £16 million to be carried forward from the accounting period ended 3
Part 4 Loss relief Chapter 2 Trade losses Carry forward of trade loss relief Carry forward of post-1 April 2017 trade loss against total profits 45A 1 This section applies if— a in an accounting period (“the loss-making period”) beginning on or after 1 April 2017 a company carrying on a trade makes a loss in the trade, b relief under section 37 or Part 5 (group relief) is not given for an amount of the loss (“the unrelieved amount”), c the company continues to carry on the trade in the next acco
UK property business losses arising from 1 April 2017 that are not relieved in the accounting period in which they arise are carried forward and may be deducted from the company’s total profits of the next accounting period. The conditions for carrying forward the loss are: the loss has not been surrendered as group relief under CTA10/S62(4)(a) the company must continue to carry on the UK property business in the next accounting period (CTA10/S62(4)(b)). Therefore, a claim must be made before re