Terminal Loss Relief Calculator — Corporation Tax 3-Year Carry Back

Terminal loss relief allows a company to carry back a trading loss in its final accounting period up to 3 years (instead of the usual 1 year). This creates CT refunds for previously profitable years. It's particularly valuable for companies winding down after profitable trading, enabling recovery of previously paid CT.

Terminal losses can be carried back 3 years from the end of the final accounting period, compared to 1 year for normal trading losses. The loss is set against profits in reverse chronological order (most recent year first). Losses are set against total profits (trading, non-trading, etc.) in each year.

A terminal loss is the trading loss in the final 12 months of trading (or the final accounting period if shorter than 12 months). If the final accounting period is longer than 12 months, only the last 12 months' loss qualifies as terminal loss — the earlier portion is treated as a normal loss with 1-year carry-back.

A terminal loss claim should be made on the final CT600 return. The claim can also be made by amending earlier CT returns. Time limits apply: claims must generally be made within 2 years of the end of the final accounting period (the time limit for CT loss claims).

A similar (but different) terminal loss relief exists for income tax (self-employment). Unincorporated traders can carry back a terminal loss in the last 12 months of trading to the previous 3 years of trade. This is separate from the CT terminal loss rules but follows similar principles.

Yes. Under CTA 2010 s37, losses (including terminal losses carried back) can be set against total profits in a period, which includes non-trading income, investment income, and other profits — not just trading profits. This makes the relief more valuable than in-period loss relief which may be restricted to trading profits only.

If the company is struck off before making a terminal loss claim, the refund opportunity may be lost. It's important to make the terminal loss claim before dissolution. HMRC can make refunds to companies in administration or liquidation — the liquidator or administrator can make the claim.

HMRC typically processes terminal loss CT refunds within 4-6 weeks of receiving a complete claim and final CT600. During busy periods, this may extend to 8-12 weeks. Complex cases or those requiring further enquiry may take longer.

Terminal losses of the final period can be used in group relief in the normal way (surrendering losses to other group companies), but only for current period group relief — not for carry-back purposes. Terminal loss carry-back is limited to the same company's earlier periods.

Only the terminal period loss qualifies for 3-year carry-back. Earlier unused losses that the company carries into its final period can be set against the final period's profits (if any), but cannot be carried back 3 years themselves. They are effectively stranded if there are no profits in the final period.

The CT rate applied to the refund depends on the rate that was paid in the profitable years. If the company paid CT at 19% in year -3 and 25% in year -1, the refund rates differ. The calculator uses a single rate — in practice, different rates may apply to different years. Review the original CT returns.

No. A CT refund belongs to the company, not its directors or shareholders personally. In a dissolution, unclaimed assets (including pending CT refunds) vest in the Crown as bona vacantia. Directors should ensure all CT refund claims are made before dissolution and refunds received and distributed before the company is struck off.