Owner-Managed Businesses

Losses carried forward

Produced by Tolley
  • 19 Oct 2021 08:10

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Losses carried forward
  • Trading losses
  • Multiple trades
  • Capital losses
  • Companies joining a group
  • Use of pre-entry capital losses
  • Non-trading deficits on loan relationships
  • Excess management expenses
  • Property business losses

Losses carried forward

Trading losses

When a company incurs a trading loss on or after 1 April 2017 which has not been relieved against current or preceding year profits and also has not been surrendered as group relief, it can claim to carry the loss (or the balance remaining after such claims) forward to the next accounting period for relief against total profits.

For losses arising before 1 April 2017, the amount of any trading loss which was not relieved against current or prior year profits is carried forward for offset against future profits arising from the same trade. This is not a claim and the loss offset is automatic. Losses carried forward will be offset against all available profits from the same trade in perpetuity until the loss is exhausted.

For further details, see the Trading losses carried forward guidance note.

In addition, subject to a de minimis of £5m, carried-forward losses are restricted to a set-off, which is limited to 50% of profits, see the Carried-forward losses restriction guidance note for details.

There are anti-avoidance provisions which prevent trading loss relief in certain circumstances where there has been a change of ownership of a company or under the ‘corporate loss refresh’ provisions. For more on this, see the Trading losses and anti-avoidance guidance note.

Multiple trades

If a company has more than one trade, then the income and expenses for the trades must be streamed when computing the trading profits or losses. Where a company has more th

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

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information

LEARN MORE LEARN MORE

Popular Articles

Qualifying interest in possession trusts ― IHT treatment

Trust property, which is the subject of a qualifying interest in possession (QIIP), may become chargeable to inheritance tax on the following occasions:•on the death of the beneficiary with the interest in possession•on the death of the beneficiary within seven years after a transfer or lifetime

19 Oct 2021 23:12 | 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

22 Dec 2021 18:41 | Produced by Tolley Read more Read more

Solicitors ― VAT treatment of services

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s

25 Oct 2021 13:44 | Produced by Tolley Read more Read more