Self Employed short 37 - Loss to be carried back to previous year(s) and set-off against income

You can claim to have the loss relieved by reference to income of an earlier year.

There are two ways of doing this, either:

• if your business was set up and commenced trading on or after 6 April 2017, you can claim relief for the loss calculated by reference to your income, but not capital gains, of the three years 2017 to 2018 to 2019 to 2020. The loss is first relieved by reference to your 2016 to 2017 income. If there is any balance of loss left, this is relieved by reference to your 2018 to 2019 income. Finally, any remainder is relieved by reference to your 2019 to 2020 income
• you can claim relief for the loss to be calculated by reference to your income for 2019 to 2020. If the loss is more than your 2019 to 2020 income, you can, if you wish, claim relief for the balance of the loss to be calculated by reference to your capital gains for 2019 to 2020, or against your income or your income and capital gains of 2020 to 2021. This option is available to any business

The amount of loss that you can claim may be restricted.

Do not make these claims if you used cash basis.

The time limit for claims is 31 January 2023.

If your business ceased in the tax year 6 April 2020 to 5 April 2021 you can claim relief for losses in the final 12 months against profit in the same business in the 3 previous years. Start with the latest year.

The time limit for claims is 5 April 2025.

These claims relate to 6 April 2020 to 5 April 2021 even though they're calculated by reference to your income or capital gains and circumstances of the earlier years.

If you want to claim relief enter the total loss to be relieved by reference to earlier years' income and gains and provide details of the amount for each year in the 'Any other information' field at the end of this section.

For more information about losses go to Relief for trading losses (Self Assessment helpsheet HS227).

Note: You cannot use the trading income allowance if you made a loss.