Corporation tax·By Simon Jacobs, CTA · ACA·2 August 2026·3 min read

Made a loss? You can carry it back and reclaim the corporation tax you already paid

In short: Made a loss this year? A trading loss can be carried back against the previous 12 months of profit, so corporation tax you have already paid can come back to you as cash.

If you’ve made a loss in your business, whether trading’s been tougher than expected, expenses have outpaced income, or new staff hires have racked up costs, there’s a tax relief worth knowing about.

What the relief lets you do

You can carry that loss back into a previous profitable year.

Any corporation tax you paid in that earlier year can potentially be reclaimed.

That reclaimed cash goes straight back into your business.

Here’s how it works

1. Say you made £100,000 profit in 2024 and paid £20,000 in corporation tax.

2. Then in 2025, you make a £100,000 loss.

3. You can carry that loss back into 2024 and reclaim the £20,000 you already paid, giving you extra cash flow to use or reinvest.

Your accountant should be flagging this

This is exactly the kind of thing a proactive accountant should be flagging for you automatically.

If yours isn’t, that’s a sign it’s time for a new one. If you are weighing that up, here is what to look for in a tax adviser.

This is general information rather than advice on your own figures. How far back a loss can go, how much of it has to be used first, and how long you have to claim are all specific rules, so check the current position or take advice before you file. If you want your own loss position worked through, see how we work or talk to us.

Common questions

The standard rule is 12 months. The loss is relieved against the total profits of the previous 12-month period, including chargeable gains, and HMRC states a company cannot carry back a loss without first setting it against the profits of the current period. See HMRC’s [Company Taxation Manual, CTM04505](https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm04505).

The claim reduces the taxable profit of the earlier year, so corporation tax already paid on that profit becomes an overpayment and is repaid. That is what makes it different from carrying a loss forward, which only reduces a future bill rather than returning money you have already handed over.

Yes. HMRC guidance states that loss relief claims can be made within two years of the accounting period in which the loss is incurred, so a loss left unclaimed for too long can stop being usable. See [CTM04580](https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm04580).

Yes. HMRC is explicit that a company cannot claim to carry back losses without first setting them off against the profits of the current period. Only what is left after that can go back against the earlier year, up to the total profits of that 12-month period.