Current year relief of trading losses

NotesQuizCBEMock

Current year relief of trading losses

Trading losses can be deducted from a Current year Total income

Illustration 1

In 2024, 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 2024: 
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.

NotesQuizCBEMock