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

Trusts and Inheritance Tax

Tax on UK resident beneficiaries of non-resident trusts ― overview

Tax on UK resident beneficiaries of non-resident trusts ― overviewIntroductionUK resident beneficiaries of non-resident trusts are subject to UK tax on payments or benefits received from the trust. They are liable for income tax on income distributions from the trust and they may also be liable to

14 Jul 2020 13:47 | Produced by Tolley Read more

Owner-Managed Businesses

Repairs and renewals

Repairs and renewalsThe key consideration in determining whether expenditure on repairs and renewals is allowable as a deduction for tax purposes is whether it is capital or revenue in nature. In some cases, it can be relatively straightforward to identify revenue repairs. HMRC provides the

14 Jul 2020 13:23 | Produced by Tolley Read more

Owner-Managed Businesses

Furnished holiday lets

Furnished holiday letsThis guidance note sets out the qualifying conditions for a property let to be treated as a furnished holiday let (FHL) for tax purposes and the subsequent tax implications.Whether or not a property qualifies as an FHL can make an important difference to the taxation

14 Jul 2020 11:46 | Produced by Tolley Read more

Carried-forward losses restriction

Carried-forward losses restriction