Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Profits definition

What does Profits mean? Profits describes the net surplus generated by a business or asset after deducting relevant costs, used to assess performance, tax liabilities, distributions and damages. The precise meaning is context‑specific. For corporation tax in the UK and Ireland, legislation provides that a company’s profits include both income and chargeable gains (capital gains), not just trading results. Key distinctions include: - Accounting profit: measured under applicable GAAP. - Taxable profits: accounting profit adjusted by statute (for example, disallowables, capital allowances, losses and group relief). - Distributable profits: profits available for lawful dividends under companies legislation (UK Companies Act 2006, Irish Companies Act 2014), broadly the company’s...

UK corporation tax trading loss relief: current year, carry back, carried-forward (pre/post‑1 April 2017), terminal loss relief, claims and anti-avoidance

Published by a LexisNexis Tax expert

Practice notes

This Practice Note

This Practice Note sets out how a company that sustains a trading loss in an accounting period may obtain relief. As outlined further below, a trading loss can be:

offset against the company’s Profits of the same year (current period loss relief)
carried back and set against profits of earlier accounting periods (carry back loss relief)
surrendered under Group relief or Consortium relief
carried forward to relieve profits arising in a subsequent accounting period (carried-forward loss relief)
carried forward and surrendered as group relief for carried-forward losses

There are also specific provisions, termed terminal loss relief, which apply where a company incurs a loss in the accounting period in which it ceases trading.

This Practice Note covers the rules on:

current period loss relief
carry back loss relief
the administration of current period and carry back loss relief
carry forward loss relief
terminal loss relief
the Anti-avoidance rules restricting or disallowing the use of trading losses

This Practice Note does not address the surrender of current year or carried-forward trading losses as group relief...

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Web page updated on 21/05/2026

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