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Carry back of losses on cessation of a trade

When a sole trader or partnership makes a loss, the trading income assessment (ie taxable profit for the year) is nil. However the losses for the period can be utilised in various ways against profits. The calculation of losses is generally computed in the same way as profits, see the . Adjustment of profits - overview guidance note.

The loss relief claims that are available for sole traders depend on whether the trade has started within the last four years, or is a continuing trade or the trade has ceased. This guidance note concentrates on claims that can be made for trading losses in the 12 months prior to cessation of the trade, often called a terminal loss. For a comparison of the various loss relief claims, see the Table ― trading loss relief summary.

The available relief for losses in opening years is detailed in the Sole trader loss relief - opening