ACCA TX ^UK Syllabus E. Corporation Tax Liabilities - Current year relief of trading losses - Notes ^{6 / 14}

Trading losses can be deducted from a Current year Total income

Illustration 1

In 2025, Cow plc. made a trading loss of (£100,000)

It also had property income of £75,000 and chargeable gains of £35,000.

• Cow plc can relieve the trading loss by deducting it from it's total income:

  Property income £75,000
  Chargeable gains £35,000
  Total Income £110,000

  Less:Current year trading loss (£100,000)

  Total Taxable profits £10,000 - this is the amount that corporation tax will be paid on.

Remember:

• Qualifying charitable donations (QCD) CANNOT be saved, loss must be deducted first and if any income remains - then the QCD can be deducted

Illustration 2

In 2025: 
Trading loss of (£100,000)
Property income of £75,000 
Chargeable gains of £35,000
Qualifying charitable donations of £35,000

Calculate Total Taxable Profits.

• Solution:
  Property income £75,000
  Chargeable gains £35,000
  Total £110,000

  Less: Current year trading loss (£100,000)

  Total Income £10,000

  Less: QCD £10,000

  Total Taxable Profit £Nil - no corporation tax will be paid.

• Note £25,000 (£35,000-£10,000) of the qualifying charitable donation was wasted because the claim for loss relief must be made in full.