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HMRC internal manual

Corporate Finance Manual

Loan relationships: non-trading deficits: carry forward

Carrying forward the loss

Where a loss is not the subject of a claim under CTA09/S459, it is carried forward by default under CTA09/S457.

Non-trading profits

The loss is set against the company’s non-trading profits for the following years. Non-trading profits are any profits that could not be subject to a CTA10/S37 claim to set trading losses against trading profits. So, for example, the company could set the deficit against chargeable gains, property income, miscellaneous income as well as profits of loan relationships and derivative contracts. ‘Trading income’ is not expressly defined within the legislation but is, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company.

Limiting the claim

CTA09/S458 allows the company to claim that a specified amount of the loss carried forward is not to be set against the non-trading profits of the following period. The company must make the claim within 2 years of the end of the accounting period in which the brought-forward non trading deficit would otherwise be utilised.

Any relief that is unused after being carried forward, whether because it

  • exceeds the profits it could be set against, or
  • has been excluded from a claim though a S458(1) claim

is carried forward to the following period, where again it is set against non-trading profits or excepted from the set-off by means of a claim.


A UK company’s only income in an accounting period was an overseas dividend of £200,000, with foreign tax paid of £36,000.

In the previous accounting period it had a non-trading deficit of £300,000 to be carried forward under CTA09/S457.

In order to maintain maximum foreign tax credit relief the company claims under S458(1) that £220,000 of the loss carried forward is not set against the non-trading profits for the following year.

Part deficit cf (80,000)
Profits 120,000
CT@30% 36,000
Tax credit relief 36,000
CT payable Nil

So £80,000 is set against the non-trading profits to maximise the DTR claim. The balance is carried forward to the next following accounting period.