Brought Forward

The term brought forward is another way of saying that you’re taking a loss from the last tax year and claiming it as an expense this year. It’s like “carrying forward” but from this year’s perspective. You can bring/carry forward as a sole trader or limited company. To understand how bringing forward works, you should first understand carrying forward.

Imagine you’re entering your income and expenses into a journal. Once you come to the end of the page, you carry forward your conclusions (whether a profit or a loss) onto the next page. When you start on the next page, you bring forward the profit or loss from the previous page.

Put simply, carrying forwards is pushing into the tax year ahead; bringing forward is taking from the previous year.

Why bring forward?

Bringing forward is a way of being more tax efficient. If you make a loss one year, it can be brought forward as an expense the following year against your profit.

• You make a loss of £5,000 in the 2022/23 tax year
• You make a profit of £40,000 in the 2023/24 tax year
• The £35,000 difference is what you’ll pay tax on

You would therefore bring a loss forward to reduce the tax you pay on your profits the next year. However as of 2017, you can only carry forward losses against profits of the same trade. You’ll therefore need to split your records between before the following dates:

• Before 1st April 2021
• On or after 1st April 2021

Any balance that you bring forward from the previous year is known as an Opening Balance.

What kind of losses can be brought forward?

Here’s a selection of types of losses that can be brought forward:

• Capital losses
• UK property business losses
• Trading losses

You can claim these on your tax return.