Trade losses
Enter here the trade loss brought forward from earlier years or brought back from later years, as well as details of the allocation of any current period loss.
We’ve made changes to accommodate the requirements of Finance (No. 2) Act 2017. Depending on when your company periods land, you’ll notice differences in the available fields on the Losses tab.
You can now enter group relief surrendered for company periods commencing on or after April 2019.
| Brought forward loss | Enter at Brought Forward Lossthe trade loss incurred in earlier periods and brought forward to this period. |
| Creative Industry loss included above treated as current period | There are certain situations where brought forward losses are classed as current period losses and, as such, can be offset against the total profits of the previous 12 months, current period, or surrendered as group relief. |
| Set against trade profits | If the company has trade profits in the current period, and you are electing for the brought forward loss to be utilised against these profits, then enter the amount to be utilised here. |
| Set against total profits | If the company has non-trade profits in the current period, and you are electing for the brought forward loss to be utilised against these profits, then enter the amount to be utilised here. Note this relief is only available for losses arising on or after 1 April 2017 |
| Group relief surrendered |
Enter the amount of brought forward trade losses surrendered. A company cannot surrender a brought forward loss. |
| Terminal loss carried back to earlier years | If the company has ceased trading and you are making a Terminal Loss Relief claim, enter the amount of the terminal loss to be carried back here. Note this relief is only available for losses arising on or after 1 April 2017 |
| Carry forward | Any brought forward trade loss not used against trade or totals profits of the period or not carried back will be carried forward to the next period. |
Enter at Brought Forward Loss the trade loss incurred in earlier periods and brought forward to this period.
This loss will be used to reduce any current period trading profit.
- If the brought forward loss is greater than the current period trade profit, then the entire current period trade profit will be offset, with the remaining brought forward loss carried forward.
- If the current period profit is greater than the brought forward loss, then all of the loss will be used against the profit, with none carried forward.
There is no election to use the brought forward trade loss against the current year trade profit, as any such loss must be used against the earliest available profit of the trade.
For periods starting on or after 1 April 2017, you’ll need to apportion the losses.
Brought forward losses arising pre 1 April 2017 may only be set against trade profits.
Brought forward trade losses arising on or after 1 April 2017 may be set against trade profits, except in certain exceptional circumstances in which case they may only be set against trade profits.
| Brought forward loss | Enter at Brought Forward Loss the trade loss incurred in earlier periods and brought forward to this period. |
| Set against trade profits | If the company has trade profits in the current period, and you are electing for the brought forward loss to be utilised against these profits, then enter the amount to be utilised here. |
| Set against total profits | If the company has non-trade profits in the current period, and you are electing for the brought forward loss to be utilised against these profits, then enter the amount to be utilised here. Note this relief is only available for losses arising on or after 1 April 2017 |
| Terminal loss carried back to earlier years | If the company has ceased trading and you are making a Terminal Loss Relief claim, enter the amount of the terminal loss to be carried back here. Note this relief is only available for losses arising on or after 1 April 2017 |
| Carry forward | Any brought forward trade loss not used against trade or totals profits of the period or not carried back will be carried forward to the next period. |
For periods commencing on 1 April 2017 only those fields associated with losses arising before 1 April 2017 will be available.
| Loss arising in period | If the company has a trading loss for the current period, then the amount of the loss will appear here. The figure is the adjusted trading loss shown at Computation Preview. |
| Brought forward Creative Industry loss treated as current period | This is the figure entered in Brought Forward Loss - Creative Industry loss included above treated as current period. |
| Current year loss set off against other income | If the company has non-trade profits for the period and Offset in current period has been ticked, then the amount of trade loss to be offset against non-trade profits will appear here. The figure will be the lesser of the trade loss and the non-trade profits. |
| Set off in current period | Tick this if you are electing for the current period loss to be used against non-trade profits. |
| Losses available to carry back to previous year | This figure is Loss arising in the period, less Current year set off against other income. |
| Amount claimed to carry back to previous year | If the company has profits in the previous year and you are electing for the current period loss to be utilised against these profits, then enter the amount to be carried back here. |
| Terminal loss carried back to earlier years | If the company has ceased trading and you are making a Terminal Loss Relief claim, enter the amount of the terminal loss to be carried back here. |
| Carry forward | Any current period trade loss not used against current period non-trade profit or not carried back will be carried forward to the next period. |
| Loss arising in period | If the company has a trading loss for the current period, then the amount of the loss will appear here. The figure is the adjusted trading loss shown at Computation Preview. |
| Set against total profits | If the company has non-trade profits for the period and Offset in current period has been ticked, then the amount of trade loss to be offset against non-trade profits will appear here. The figure will be the lesser of the trade loss and the non-trade profits. |
| Set off in current period | Select if you are electing for the current period loss to be used against non-trade profits. |
| Loss carried back to previous year | If the company has profits in the previous year and you are electing for the current period loss to be utilised against these profits, then enter the amount to be carried back here. |
| Terminal loss carried back to earlier years | If the company has ceased trading and you are making a Terminal Loss Relief claim, enter the amount of the terminal loss to be carried back here. |
| Carry forward | Any current period trade loss not used against current period non-trade profit or not carried back will be carried forward to the next period. |
| Loss arising in period | If the company has a trading loss for the current period, then the amount of the loss will appear here. The figure is the adjusted trading loss shown at Computation Preview. |
| Set off in current period | Select if you are electing for the current period loss to be used against non-trade profits. |
| Set against total profits | If the company has non-trade profits for the period and Offset in current period has been ticked, then the amount of trade loss to be offset against non-trade profits will appear here. The figure will be the lesser of the trade loss and the non-trade profits. |
| Maximum available for group relief | Enter the maximum amount of trade losses available for surrender as group relief. |
| Group relief surrendered | Enter the amount of trade losses surrendered. |
| Loss carried back to previous year |
Losses incurred in accounting periods ending between 1 April 2020 and 31 March 2022 can be carried back 3 years. If the company has profits in previous years and you are electing for the current period loss to be utilised against these profits, then enter the amount to be carried back here. There is no limit on the amount of trading losses that can be carried back to the preceding year but after that a maximum of £2m can be carried back to the 2 earlier years. The £2m limit applies to each accounting period falling within 1 April 2020 to 31 March 2022 (subject to a £2m group cap). Claims for the extended relief that exceed the de minimis of £200,000 must be made in a company tax return. In this case, tick Repayment due for an earlier period found in Non-financial Information and then Information for the Return. There is no need to submit amended returns for the earlier periods to which the extended relief applies as the claims will be treated as amendments to those returns. Amended returns for these periods will be rejected for online submission as, in most cases, they will be out of time for amendment. Claims below the de minimis limit of £200,000 may be made outside of the company tax return. Please contact HMRC or visit www.gov.uk (opens in a new window or tab) for details of their preferred method of submitting such claims. |
| Terminal loss carried back to earlier years | If the company has ceased trading and you are making a Terminal Loss Relief claim, enter the amount of the terminal loss to be carried back here. |
| Carried forward | Any current period trade loss not used against current period non-trade profit or not carried back will be carried forward to the next period. |
| Available loss (A) | Enter the amount of available loss. There are circumstances where this may include brought forward losses. |
| Available qualifying expenditure (B) | Enter the amount of available expenditure. There are circumstances where this will not only include current period expenses. |
| Surrenderable loss (lower of the above) | This is calculated as the lower of A and B. |
| Potential tax credit | This is calculated as the surrenderable loss multiplied by the appropriate percentage for the type of creative industry. |
| Amount claimed | Enter the amount of tax credit claimed up to the calculated amount of potential tax credit. |
| Loss surrendered | Calculated as the amount of tax credit claimed multiplied by the appropriate percentage for the type of creative industry. |
Background
From 1 April 2021, an R&D tax credit claim made by a small or medium enterprise (SME) company will be subject to a cap, calculated as £20,000 (time-apportioned for short accounting periods) plus three times the company’s total ‘relevant’ expenditure on workers.
Relevant expenditure on workers means:
- the total amount of PAYE and NIC liabilities for the period for all employees, not just those undertaking R&D, less
- amounts relating to work done by the company's employees acting as externally provided workers or subcontractors on the R&D activities of connected companies, plus
- any PAYE and NIC paid by connected companies to employees acting as externally provided workers or subcontractors engaged in qualifying R&D for the claimant company.
Also see the R&D intensive SMEs section.
| Company exempt from R&D tax credit cap | Certain companies, such as some (but not all) of those actively managing intellectual property are exempt from the tax credit cap. If this box is selected, then the software will not apply the cap. |
| Surrenderable loss |
Calculated as the lower of Unrelieved trade losses and Total Enhanced Expenditure. See HMRC's Corporate Intangibles Research and Development Manual (opens in a new tab) |
| Potential tax credit | Calculated as Surrenderable loss x 14.5% in relation to expenditure incurred before 1 April 2023 and 10% thereafter. |
| Employee tax and NIC paid |
Enter the total amount of PAYE and NIC liabilities for the period for all employees, less:
|
| R&D tax credit cap | Calculated as £20,000 (time-apportioned for short accounting periods) plus three times Employee tax and NIC paid. |
| Maximum claimable | Calculated as lower of Potential tax credit and R&D tax credit cap. |
| Maximum claimable | From Maximum claimable at R&D Tax Credit – Cap, above. |
| Amount claimed | Enter the R&D tax credit claim. This cannot be greater than Maximum claimable. |
| Amount set off against liabilities on this return | If any of the claim is to be used to set off liabilities shown on the return, rather than repaid directly, enter the amount here. |
| Loss surrendered |
Calculated as Amount claimed divided by 14.5% in relation to expenditure incurred before 1 April 2023 and 10% thereafter. This is the loss foregone as a consequence of the tax credit claim. |
For periods straddling 1 April 2023
| Qualifying R&D expenditure |
Allocate Qualifying R&D expenditure to the periods before and on or after 1 April 2023. This ensures that the Total enhanced expenditure is calculated at the appropriate rates. |
| Unrelieved trade losses |
This is used in the calculation of Surrenderable loss for each period. See HMRC's Corporate Intangibles Research and Development Manual (opens in a new tab) |
| Amount claimed |
Enter the R&D tax credit claim for the periods before and on or after 1 April 2023. This cannot be higher than the Potential tax credit for each period. |
From 1 April 2023, loss-making SME companies are eligible to claim a payable tax credit at the higher rate of 14.5%, provided that they have an R&D intensity of at least 40% (for accounting periods beginning on or after 1 April 2024, the intensity threshold drops to 30%). The R&D intensity is the ratio of the company’s qualifying R&D expenditure to its total expenditure for a given accounting period.
A SME is loss-making if it makes a trading loss for tax purposes before the additional deduction is taken. Unless a company has such a trading loss, it will not be entitled to that deduction or any payable tax credit.
From 8 August 2023, companies should indicate on the new digital ‘Additional information form’ whether or not they are R&D intensive companies. This form should be used for all claims made from 8 August 2023, regardless of the accounting period to which they relate.
The R&D expenditure and total expenditure of connected companies are aggregated for the purpose of determining the R&D intensity.
Unless the trade has ceased, the sum of brought forward and current year trade losses not relieved against current or prior period profits are carried forward to the next period.
Enter here any losses brought back from later periods to be offset against current period profits.
You cannot bring back losses in excess of current period profit available to be relieved.
Identify the accounting period or periods from which the losses are carried back by attaching a PDF document in Attachments for Online Filing.