Non trading losses added back in Trade Profit Computation for a Limited Company

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Rajiv Puri

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Oct 1, 2025
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  • #1
    My accountants have sent me draft accounts for my limited company for approval. They have shown Profit/Loss of Disposal of Asset under Administrative expenses in Detailed Profit and Loss Account to the value of £26031.
    They have added back this figure in Trade Profit Computation. Profit after dis-allowable expenses is £54588 which has resulted in Trading profit before capital allowances has now become £80619. Capital Allowances shown are £5542 and final Trading profit is £75077. Corporation tax at 25% is £18769.25 and after Marginal relieff of £2623.85, corporation tax liability is £16145.40

    My question is HMRC changed rules in 2023 that non trading losses after April, 2017 were not able to get this relief. My understand is that if these losses occurred prior to April, 2017, Can my company still get relief rather than adding to taxable profits.
     
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    Rajiv Puri

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    Oct 1, 2025
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  • #3
    UK Contractor Accountant said:
    Sorry what are your non trading losses?

    You have an accounting loss on sale of fixed assets as far as I can see from your Post, which is dealt with under the Capital Allowance computations for the company.
    Click to expand...
    Thnak you, Sir for quick reply.
    Let me clarify this - My accountants have shown 26031 as an expense - Profit/Loss of disposal of asset and then they hve shwn 22160 as Disallowable costs and then added to 22160 in trade profir computation. I hope this helps
     
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    MyAccountantOnline

    MyAccountantOnline

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  • #4
    Adjusting the taxable profits for a profit/loss on disposal of an asset is different to Corporation tax loss relief.

    Do get your accountants to explain this but broadly when your company sells a vehicle or equipment it cant claim tax relief on the loss it makes as shown in the profit and loss account (which will be the original cost price less depreciation and less the sale proceeds) instead it'll have a balancing allowance (which reduces tax) or a balancing charge (which adds to the tax). That's calculated based on the original purchase price less capital allowances claimed.
     
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    Bobbo

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    Jul 7, 2020
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  • #5
    Rajiv Puri said:
    Thnak you, Sir for quick reply.
    Let me clarify this - My accountants have shown 26031 as an expense - Profit/Loss of disposal of asset and then they hve shwn 22160 as Disallowable costs and then added to 22160 in trade profir computation. I hope this helps
    Click to expand...
    The numbers you've given don't seem to indicate 22,160 being added back anywhere. What is this amount supposedly being disallowed for?
    If profit before tax in the accounts is 54,588, then loss on disposal of 26,031 is added back then capital allowances of 5,542 are deducted it gives the 75,077 taxable profits figure. Where is 22,160 in all this?

    Still unclear what non-trading loss you are expecting to appear.
     
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    MyAccountantOnline

    MyAccountantOnline

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  • #6
    Bobbo said:
    The numbers you've given don't seem to indicate 22,160 being added back anywhere. What is this amount supposedly being disallowed for?
    If profit before tax in the accounts is 54,588, then loss on disposal of 26,031 is added back then capital allowances of 5,542 are deducted it gives the 75,077 taxable profits figure. Where is 22,160 in all this?

    Still unclear what non-trading loss you are expecting to appear.
    Click to expand...

    The OP said 'Profit after dis-allowable expenses is £54588'
     
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    Daybooks

    Daybooks

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    • Sep 29, 2017
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  • #7
    If I follow: you made a loss on the disposal of an asset and that loss arose in the current year.

    You refer to trading losses incurred pre and post April 2017 when their potential utilisation changed.

    Your question is not clear and neither is what loss you think is able to be relieved.

    However if you have current year taxable profits then you can use prior year losses (with caveats) to offset the current year taxable profits.

    My presumption is that you querying whether this current year profit (whether the disposal loss add back or otherwise) could be offset against a pre April 2017 loss.

    The answer lay in the rules surrounding the use of these pre April 2017 losses. Generally pre April 2017 losses can only be carried forward and offset against future profits from the same trade within the same company that incurred the loss.

    Thus any taxable profit in the current year that relates to an available non utilised loss of the same trade from pre April 2017 could be used to offset.

    The devil will be in the detail.
     
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