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 isEm dashes fixed in existing materialntd 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.