Using a business loss
A loss can cut your tax this year, bring a refund for last year, or lower future bills. See what each way saves, which is best, and when you need to claim.
Your answer
Choose your business type and enter the loss.
About this calculator
For a sole trader, a partner, or a company with a trading loss, in England, Wales or Northern Ireland.
It compares the main ways of using the loss. We can mix them, or add others such as group relief, when we make the claim.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
If you're self-employed, a loss can come off all your income for this tax year, last year, or both. Against other income it's capped at £50,000, or a quarter of your income if more, and it uses your tax-free allowance first. A new business can take a loss back 3 years. Otherwise it carries forward against this business's future profits.
A company sets a loss against its other profits for the same year first, then can carry what's left back 12 months for a Corporation Tax refund, or carry it forward. Closing businesses can go back 3 years. We work out the tax each way would save, at today's rates, and show when you'd get it.
Worked example
The best way to use your £20,000 loss is against last year's income, which saves about £5,946 in tax, all as a refund of tax already paid.
Self-employed, 2026/27 · England, Wales or NI bands · carrying on · today's rates for every year
| Loss from your business this tax year | £20,000 |
|---|---|
| Against this year's income | |
| This year: £10,000 of loss against £10,000 of income | − £0 |
| Next year: £10,000 of loss against £40,000 of income | − £2,000 |
| Tax saved: against this year's income | £2,000 |
| Against last year's income | |
| Last year: £20,000 of loss against £60,000 of income | − £5,946 |
| Tax saved: against last year's income | £5,946 |
| Carry it forward | |
| Next year: £20,000 of loss against £40,000 of income | − £4,000 |
| Tax saved: carry it forward | £4,000 |
Worked out using HMRC's 2026/27 income tax rates for England, Wales and Northern Ireland, held for every year.
Questions people ask
Why does setting the loss against this year sometimes save nothing?
The loss comes off all your income for the year, and you can't choose to use less. If your other income is under the tax-free allowance, the loss just uses up income that wasn't taxed anyway. Carrying it back or forward may then save more.
When do I get a refund?
A claim against last year (or earlier years) gets tax back that's already paid. You can claim as soon as you know the loss, without waiting for this year's return. A company gets its refund once its tax return with the claim is processed.
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