Guide · worked example

Loss carry-back: the £10,000 loss that turns into a £950 refund

If your company made a loss this year but paid corporation tax last year, you may be able to claim some of that tax back in cash. Plenty of small companies never hear about this. Here is the whole mechanism on one page, using a made-up company.

Year 1 · ended 31 Mar 2025

Filed and settled long ago

Turnover£30,000

Expenses(£25,000)

Taxable profit (box 315)£5,000

Corporation tax at 19%£950

£950 paid to HMRC · 1 Jan 2026

Year 2 · ended 31 Mar 2026

The loss year, being filed now

Turnover£18,000

Expenses(£28,000)

Trading loss(£10,000)

Bank interest received£2,000

£10,000 of loss looking for a home

Where the £10,000 goes when the claim is made

The order is fixed by law: the loss must soak up this year's other profits before any of it can travel back a year. Whatever neither step uses carries forward.

Against this year’s other income first. The £2,000 bank interest would have been taxed; the loss wipes it out, so Year 2’s bill is £0 instead of £380.

s37(3)(a) CTA 2010 · CT600 boxes 275 and 295

£2,000

tax avoided now: £380

Back against Year 1’s profit. Capped at the £5,000 Year 1 actually made. HMRC recalculates Year 1: £5,000 minus £5,000 leaves £0 profit, so the £950 already paid comes back as cash, plus a little repayment interest.

s37(3)(b) CTA 2010 · box 45 ticked, prior year reprocessed

£5,000

cash refund: £950

The rest waits for better years. £10,000 minus £2,000 minus £5,000 leaves £3,000 carried forward against future profits.

s45 CTA 2010 · worth £570 or more against future tax

£3,000

carried forward

Claim or don't claim?

Both are legitimate. The trade-off is cash now at last year's tax rate versus a bigger saving later if future profits will be taxed at a higher rate. The choice always belongs to the company.

	With the claim	Without
Year 2 tax bill (on the £2,000 interest)	£0	£380
Cash refund of Year 1 tax	£950	£0
Loss left for future years	£3,000	£10,000
Cash position today	+£1,330 better off	·

The practical details

The carry-back window is the previous 12 months, and the claim must be made within two years of the end of the loss period.
It is all-or-nothing up to the cap: you cannot pick a smaller amount to carry back, but you can choose not to claim at all.
If the company is ceasing to trade, terminal loss relief extends the window to three years for the final period's losses.
There is no single carry-back box on the loss year's CT600. The claim is box 45 plus the loss set against this year's other profits (boxes 275/295), with the carried-back amount detailed in the tax computations. HMRC then reprocesses the earlier year and pays the refund.

Filing a loss year yourself?

The A.X.E.L Filing wizard spots a loss year automatically, asks one question about last year's profit, and prepares the whole claim: the boxes, the computations and the accounts, ready to file.

Start your return

Illustration only, with everything at the 19% small profits rate for simplicity. Real returns can differ (marginal relief, different prior-year rates, part-period caps). This page explains the mechanism; it is not tax or accountancy advice, and the figures on any return remain the company's responsibility.