Trade losses

In this lesson

1. 0:00 Trade loss relief options overview
2. 0:42 Current period relief mechanics
3. 1:35 Carry back relief rules
4. 2:10 Carry forward relief and partial claims

About this lesson

You'll discover four distinct relief options: offsetting losses against current year total profits, carrying losses back up to 12 months (or 36 months in the final year of trading), and carrying losses forward to future years. Understanding these rules is essential for the TX (Taxation) paper, as loss relief questions are common and the order of relief matters — companies must claim current period relief before any carry-back, unlike sole traders. The key to maximising relief is knowing when you have flexibility. When carrying losses forward, you can claim partial relief, meaning you can choose to offset only part of your loss against total profits and preserve the remainder for future years. This is particularly useful when you want to protect your qualifying charitable donations relief (QCD) claim. For all relief options except carry-forward, claims must be made within two years of the end of the loss-making period. By mastering these relief methods and their timing rules, you'll be able to advise on the most tax-efficient approach for any company facing trading losses.

Duration: 3m