Last updated: 14 October 2026
Can your company carry back a loss against profits from two trades?
Yes. If your company had two trades running in the same accounting period, a later trading loss can be carried back 12 months and set against the company’s total profits of that earlier period, from both trades. A company’s trading losses can be set first against its total profits of the same period, then carried back against total profits of the previous 12 months. Any loss left over is carried forward. The carry back must be made against total profits, not just profits from the trade that made the loss.
Company loss relief options
| Relief | How it works |
| Current year | Set against total profits of the same period |
| Carry back | Against total profits of the previous 12 months, after current year relief |
| Carry forward | Against total profits of later periods (with restrictions above £5m) |
| Terminal losses | Losses in the final 12 months, back 3 years |
| Group relief | Surrender to other group companies |
Example
Quaver Media Ltd ran an IT consultancy and a music label in the year to 31 March 2026, making total profits of £90,000. It gave up IT consultancy in 2026 and concentrated on music. In the year to 31 March 2027, the music business makes a £50,000 loss. The company carries back the loss against the £90,000 of profits for the previous year, reducing taxable profits to £40,000 and giving a corporation tax refund.
Corporation tax rates
- 19% on profits up to £50,000
- 25% on profits over £250,000
- Marginal relief between
Carrying back a loss to a year taxed at a higher marginal rate can give a larger refund.
When a trade ceases
If a trade stops, losses of that trade can’t be carried forward against profits of a different trade unless relief is given against total profits. Losses carried forward from before April 2017 can only be used against profits of the same trade.
Change of ownership
If a company changes ownership and there’s a major change in the nature or conduct of its trade within 5 years, carried-forward losses may be restricted.
Making a claim
The claim is made in the company tax return (CT600) for the loss-making period, usually within 2 years of the end of that period.
Sole traders
Sole traders with two businesses that make a loss in one can use sideways relief against total income, including profits from the other trade, subject to caps.
Common mistakes
- Forgetting the 2-year deadline for carry-back claims
- Using a loss against the wrong period
- Missing the order: current year first, then carry back
Records
Keep management accounts for each trade, so you can show that both were active in the earlier period and what profit each made. This supports the claim if HMRC asks.
Frequently asked questions
Can I choose to carry forward instead?
Yes, a company can choose not to carry back.
Is the refund paid quickly?
HMRC usually repays once the CT600 is processed.
Can I carry back further than 12 months?
Only for terminal losses.
Does the loss reduce dividends paid last year?
No, but it can affect future distributable profits.
Related: first-year losses against second-year profits, using losses in the same tax year and selling your first business as a student.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with company loss relief. See our limited company accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
