Relief of property losses

By Tolley

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

  • Relief of property losses
  • Corporation tax ― property losses
  • Corporation tax ― loan relationship deficits

Corporation tax ― property losses

For corporation tax purposes, trading losses are computed in just the same way as trading profits. Capital allowances will augment a loss (and the business may therefore wish to consider disclaiming these) and balancing charges will decrease the loss.

The rules in relation to corporation tax relief for property losses can be found in CTA 2010, s 62. Under these rules, loss relief may be provided in the current year or future years as follows:

  • current year ― the loss should first be set off against the company’s total profits for the period concerned, or it may be surrendered under the group relief rules
  • future years ― remaining losses can be carried forward for offset against total profits of the following accounting period, or, for losses accruing on or after 1 April 2017, group relief (referred to as ‘group relief for carried forward losses’), see the Group relief for carried-forward losses guidance note (subscription sensitive).

CTA 2010, ss 62, 99(1)(e), 102

For losses arising on or after 1 April 2017, the carry forward relief is not automatic, a claim must be made within two years of the end of the accounting period for which the relief is claimed, or such later time as HMRC may allow. Prior to 1 April 2017, there was no need to make a claim.

An investment company that has a property business, but then ceases to carry out that property business, may regard any brought forward property lo

More on Property investment companies: