Corporation tax loss relief for carried-forward losses
Corporation tax loss relief for carried-forward losses

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Corporation tax loss relief for carried-forward losses
  • Main corporation tax loss relief reforms
  • The use of carried-forward losses prior to 1 April 2017
  • The use of carried-forward losses from 1 April 2017 onwards
  • Loss relaxation
  • Group relief for carried-forward losses
  • Loss restriction
  • Specific industries
  • Anti-avoidance provisions
  • Practical application and comment

FORTHCOMING CHANGE relating to a corporate capital loss restriction: Finance Bill 2019–20 will introduce a corporate capital loss restriction (CCLR), limiting companies’ use of carried-forward capital losses to 50% of their capital gains arising in an accounting period. Companies will have an allowance permitting them unrestricted use of up to £5m of capital or income losses per year. The CCLR will also apply to pre-entry capital losses in the limited situations in which these losses may be set off against capital gains. The CCLR will be incorporated within the existing rules imposing a corporate income loss restriction described in this Practice Note and will apply to gains accruing on or after 1 April 2020, with anti-forestalling measures applying since 29 October 2018. For more information, see News Analysis: Budget 2018—corporate capital loss restriction.

Provisions in the Finance (No 2) Act 2017 (F(No 2)A 2017) made considerable reforms to the rules governing what companies can do with carried-forward corporation tax losses. The reforms have resulted in two sets of rules on the use of carried-forward losses—one for losses arising prior to 1 April 2017 and one for losses arising on or after 1 April 2017 (post-1 April 2017 losses). This Practice Note provides a summary of the rules that apply to post-1 April 2017 losses, which took effect from 1 April 2017.