Carried-forward losses restriction

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

Overview of the carried-forward loss restriction

An 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 a set-off which is limited to 50% of profits.

The rules restricting losses apply to accounting periods beginning on or after 1 April 2017, but with straddling provisions as discussed 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.

Extension of the restriction to capital losses from 1 April 2020

For accounting periods beginning on or after 1 April 2020, with transitional rules (see below) for periods straddling that date, the use of carried-forward capital losses is restricted, in a similar way to income losses.

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

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

Corporation Tax

Temporary differences

Temporary differencesCalculation of temporary differencesThe temporary difference arising in respect of an asset or liability is calculated by comparing the carrying value of that asset or liability with its tax base.IAS 12 uses the concept of taxable or deductible temporary differences. Whether a

14 Jul 2020 13:49 | Produced by Tolley in association with Steve Collings Read more

Value Added Tax

Holding companies ― VAT status of activities

Holding companies ― VAT status of activitiesThis guidance note examines how to determine the VAT status of a holding company’s activities. In particular, it looks at:•when a holding company is or is not in business•if a holding company is in business, whether its activities are exempt or taxableThe

14 Jul 2020 17:13 | Produced by Tolley Read more

Carried-forward losses restriction

Carried-forward losses restriction