ACCA ATX UK Syllabus A4. Corporation Tax - 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 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 the Total Taxable Profit.
Solution:
Property income £75,000
Chargeable gains £35,000
Total Income £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.