Hi Alan Howie,
Terminal loss relief allows you to carry back any trading losses that occur in the final 12 months of a trade and set them off against profits made in any or all of the 3 years up to the period when you made the loss.
For each year, you can only offset the loss against the profits in that year if your company or organisation was carrying on the same trade at some point in the accounting period or periods that fall in that year.
If the accounting period end date has changed, or any of the earlier accounting periods in that 3 year period are less than 12 months, then you will have to apportion the profit.
The loss can only be offset against that portion of the profits falling within the 3 year period.
Any loss must be offset against the profits of most recent years first, before it can be carried back to earlier years.
Losses must be made in the order they’re made, starting with the earliest.
Please refer to guidance available here:
Corporation Tax: terminal, capital and property income losses
Thank you.