Tax and NI

12. Losses

12.1 A limited company can offset its trading losses against all other income in the accounting period.

• Alternatively, the loss can be 'carried forward' against profits from the same trade, to reduce future tax bills, or 'carried back' and offset against profits from the previous year. The company can be reimbursed for tax already paid.

12.2 A self-employed person can also offset trading losses against any other income received (earnings from a job, revenue from investments), plus any capital gains arising in that year.

• Alternatively, losses can be carried forward to offset against future profits from the same trade. Losses in the first four years, or in the last year, may also be carried back up to three years.