Carried-forward losses restriction

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

Overview of the carried-forward loss restriction

There is an important restriction in the use of losses carried forward as set out in CTA 2010, ss 269ZA–269ZZB (Pt 7ZA). Subject to a de minimis of £5 million (known as the deductions allowance), most carried-forward losses are restricted to a set-off which is limited to 50% of profits. The restriction also applies to carried-forward capital losses as set out below.

It is important to note that the 50% restriction also applies to trading and certain other income losses carried forward from periods before 1 April 2017.

For further details, including the increase in the deductions allowance for the reversal of an onerous lease and also for insolvent companies, see Simon’s Taxes D1.1108BA.

HMRC guidance can be found at CTM05010 onwards.

Losses unaffected by the restriction

The restriction only impacts carried-forward losses and does not affect loss relief in the following scenarios:

•
current year loss reliefs (although see below in respect of creative industries losses)
•
carry-back of trade losses, including pre-1 April 2017 terminal losses
•
terminal losses, augmented

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Corporation Tax

Carried-forward losses restriction

Carried-forward losses restrictionOverview of the carried-forward loss restrictionAn important restriction in the use of losses carried forward was introduced by Finance (No 2) Act 2017. Subject to a de minimis of £5m (known as the deductions allowance), most carried-forward losses are restricted to

14 Jul 2020 11:09 | Produced by Tolley Read more

Corporation Tax

Double tax relief

Double tax reliefWhen income arises in a foreign country to a UK resident company and that income is taxable in that foreign country, the UK may give the company relief for the foreign tax by crediting the foreign tax against the UK tax charged on that income. This might include withholding tax on

14 Jul 2020 11:31 | Produced by Tolley Read more

Personal Tax

Interest and penalties on late paid tax under self assessment

Interest and penalties on late paid tax under self assessmentInterestIf the capital gains tax, the balancing payment or payments on account of tax and / or Class 4 national insurance contributions (NIC) are paid late, HMRC will charge interest on the amount overdue from the original due date. The

14 Jul 2020 12:00 | Produced by Tolley Read more

Carried-forward losses restriction

Carried-forward losses restriction