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An individual may claim to carry back trade a loss incurred in the tax year in which the trade commenced or in any of the next three tax years¹, provided the trade is carried out on a 'commercial' basis² (see 'What is a 'commercial' trade?' below).

The loss can be carried back against the total income for the three years preceding the year of loss, taking income of an earlier year before that of a later year³.

A claim for relief must be made within 12 months of the normal self-assessment filing date (31 January after the tax year in which the loss is incurred)⁴.

Under the previous basis period rules for opening years (see B8.102), if a loss was included in the computations of two successive years of assessment, it was included in the first year and ignored in the second year⁵. From 2023/24 onwards the opening year basis rules cease to apply and the loss for the tax year is the loss