D1.925 Corporate tax relief for capital losses—overview
Unless there is a specific provision to the contrary, a capital loss is computed in the same way as a capital gain. Where a capital loss arises on the disposal of an asset, it is an allowable loss if, had the calculation shown a gain, that gain would have been a chargeable gain1. An allowable loss does not include a loss that, if it had been a gain, would have been exempt from corporation tax2.
An allowable capital loss incurred by a company in an accounting period is deducted from any chargeable gains realised by that company in the same accounting period. Any of the loss which cannot be so relieved is carried forward and deducted from chargeable gains realised by that company in a subsequent accounting period although the use of carried-forward capital losses can be restricted from 1 April 2020 (see 'Restrictions on relief for carried-forward capital losses' below)3.
Capital losses are carried forward without time limit. There is no capital gains equivalent of CTA 2010, s 673 (see D1.1126) to restrict the carry-forward of capital losses on a change of ownership. A capital loss incurred by a company remains with that company until the company is liquidated, regardless of any subsequent changes in the ownership, business or business of the company. This is so even if the company temporarily ceases to be within the charge to corporation tax.
There is no provision for the surrender of capital losses