Corporation Tax

Current year relief and carry back losses

Produced by Tolley
  • 16 May 2022 13:23

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Current year relief and carry back losses
  • Current year relief for trading losses
  • Potential restrictions on trading loss relief
  • Carry forward of unutilised current year losses
  • Carry back relief for trading losses
  • Temporary carry back extension for APs ending between 1 April 2020 and 31 March 2022
  • Standalone companies making an extended carry back loss claim
  • Group companies making an extended carry back loss claim
  • Group loss carry-back allocation statements
  • Claims for current year and carry back of trading losses
  • More...

Current year relief and carry back losses

Current year relief for trading losses

Trading losses can be offset against total profits of the same period. Total profits covers, for example, chargeable gains or non-exempt dividends. The loss is set against profits before any qualifying charitable donations have been deducted, see the Qualifying charitable donations guidance note.

The maximum claim for relief is the lower of the available loss or the available profit. In other words, no partial claims are allowed and the claim must either use all of the loss, or eliminate all of the available profits.

See Example 1.

Once trading losses have been relieved against profits of the same period in which the loss was generated, a claim may also be made under CTA 2010, s 37(3)(b) to carry back any remaining loss against profits of the preceding 12 months. This is explained in more detail below.

Potential restrictions on trading loss relief

Relief for losses against current or preceding year profits is not allowed in certain circumstances, as follows:

  1. the losses are incurred in carrying on a trade outside the UK

  2. the loss is incurred in a trade which is not carried out on a commercial basis with a view to the realisation of profits

  3. the loss is incurred in a trade of farming or market gardening which has incurred losses in the previous five years

CTA 2010, ss 37(5), 44, 48

Losses may also be restricted where anti-avoidance rules apply, see the Trading losses and anti-avoidance guidance note.

Carry forward of unutilised current year

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

TAKE A FREE TRIAL

Popular Articles

Transactions in securities and the Phoenix TAAR on a company sale or winding-up

The transactions in securities (TiS) legislation is anti-avoidance legislation aimed at situations where close company shareholders have engineered a disposal of shares to obtain a beneficial capital gains tax (CGT) rate, ie avoid income tax, on specified transactions.The targeted anti-avoidance

21 Mar 2022 07:27 | Produced by Tolley Read more Read more

Research and development expenditure credit (RDEC)

RDEC ― large company R&D reliefSince 1 April 2016, or from 1 April 2013 by election, large company R&D relief is given through research and development expenditure credits (RDEC), which is a taxable credit payable to the company. As the credit is taxable, it is also sometimes called an above the

05 Apr 2022 08:42 | Produced by Tolley Read more Read more

Pilot trusts and Will planning

A ‘pilot trust’ is one that holds a nominal amount of property (typically a small sum of cash) and does not become active until further funds are added later. The later addition is sometimes made on the client’s death by a gift in his Will. The use of pilot trusts in conjunction with Wills became a

23 Mar 2022 10:45 | Produced by Tolley Read more Read more