Company trading loss: current-year and 12-month carry-back relief (CTA 2010 s.37)

Under s.37(3) CTA 2010, a claim deducts the trading loss from the company's total profits of the loss-making period. If the claim requires, it also deducts the loss from total profits of previous periods falling within the 12 months before the loss-making period. Total profits include chargeable gains, so the £20,000 gain in the year to 31 March 2026 is relieved first. Under s.37(4), a carry-back deduction is made only for the amount that cannot be deducted in a later period, so the current period must be used before the earlier one. The remaining £60,000 is carried back against the £50,000 profits of the year to 31 March 2025. The unused £10,000 is carried forward under s.45A, because the company continues to trade. The claim must be made within two years of the end of the loss-making period (s.37(7)).

Why A is wrong: Section 37 relieves the loss-making period first; a carry-back claim cannot skip the current period's total profits.

Why B is wrong: The general carry-back under s.37 is limited to the previous 12 months, not three years.

Why C is wrong: Section 37 sets the loss against total profits, which include chargeable gains.

Why E is wrong: A chargeable gain in the loss-making period forms part of total profits against which the loss can be set; it does not force carry-forward.